is the fed, i know it's supposed to, is the fed apolitical in this election season?i would hope so. i hope the fed would be focusing on the real economy and what actions it should be taking. i think an extension of the twist, which is probably likely to happen today would not be viewed particularly political. a qe 3 would be viewed as more political. the closer to the election the greater the risk is that it could be viewed as lit cal. today is a safe time period. >> steve, have you got something to say to that? >> yeah, i think that's right. what's interesting it's already political. i think what the fed will say, they are going to take what action the economy needs regardless of politics. i think the bar becomes higher. it has to be more obvious it's needed. the reason why i've been skeptical about qe 3 today. i don't think the bar is crossed or reached that limit for qe 2, a 2% economy, a tick up in unemployment. to come forward and say $600 billion of qe 3 which seemed to be the case, the political environment now, maybe it's going to get worse, certainly right n

the fed is wrong before, james. do you believe the fed's forecast? are they being too dour?no. if you look at the real economy and financial markets which have decoupled in some levels from the real economy, is fed mentioned housing and so in terms of their ability, however, to move the needle, it is somewhat diminished. they can price risk asets ever higher. >> obviously, if low rates haven't been stimulating the economy now, it's difficult to continue to create a stimulus effect going forward. but the question here is, has the trade changed from the last three years? has anything changed for the investor, james? >> i think you have to be diversified and look to fixed income and the two economies that are benefiting the most in terms of capital flows in the face of the euro crisis and we think is accelerating, you have to be in those asset classes and classes that don't corelate with each other. the cost of debt and the cost of financing isn't the issue. it's availability of credit and banks' interest in expanding credit at this level. >> and so you should watch our special

clearly, the fed is very accountable. we testify frequently, not just myself, but other members of the board or reserve bank presidents. we give speeches. we, you know, we hear and are at various events and so on. it's inherently difficult because the fed is a complicated institution, and you've seen the last four lectures these are not simple issues, but all we can do, i think, is do our best and hope that our educators, media, and so on will get into carrying the story and help people understand better. it is a difficult challenge. it is a difficult challenge, and it does reflect an attention that's been in the u.s. american feelings about central banks ever since the beginning. >> thank you, mr. chairman. earlier, you mentioned that the fed had several ways to undermind the large purchases of scales and efforts including funneling them back into the market. what guarantees investors are willing to buy back from them in the future? >> uh-huh. well, again, first of all, we have essentially three different types of tools

>> it's a tool the fed has and the fed will continue to use.nk it helps a big increase in interest rates. so do we have as much of an effect from interest rates as we did five years ago? no, is it a negative effect? i don't think so. we have a strained economy. i don't think the fed can do a lot more. >> good to have you on the program, thank you so much. >> okay, heading toward the close, and look what's happening. it's coming back, down 28 points. the headline tomorrow will be unchanged on the market, right? >> you know who else is worried about the fiscal cliff? ben bernanke, he said it an hour ago, you'll hear it next, stay with us. olaf's pizza palace gets the most rewards >>> well it's all about bernanke today, but it's a big deal when the shift away from the latest move to another topic about ben bernanke. >> yeah, i'm surprised he answered the question. this is what we talked about when they allow tax cuts to expire. spending would go down simultaneously, here is what he said. >> as we move forward in the year, we do anticipate that the

its the only insurer subject to the fed's financial stress tests. bank of america is at its highest price since early may, up 4.5%. b-of-a reportedly is talking with a swiss private bank about its merrill lynch international wealth management business. it could bring in $2 billion for bank of america. after microsoft introduced its challenger to apple's ipad late yesterday, we saw shares moving up. microsoft continues trading over $30 per share, up almost 3% today. volume was heavy after the company unveiled its tablet computer called surface. we will have more on that in a moment. and we have a closer analysis of microsoft's stock chart from michael kahn. it's under the "blogs" tab on nbr.com. fedex has a unique perspective on the economy. it has seen volumes of certain types of cargo shipping fall for two quarters in a row. still, earnings per share were better than expected as revenues were higher. fedex's ground shipping business has been growing while express shipping has been weaker. shares delivered a 2.8% rally, even though its forecast was

how bad would it have to get before the fed responds to that? >> they'll try to take out the tail risk of a deflationary stock and buy securities if need be if that happens. for europe for the u.s. to keep talking about chubby checker and twist and shout for europe the song i keep hearing is promises, promises. we never get the solution. they have the tools that could be used but they never actually use them so we'll have to wait and see on that. >> susie: we certainly will. hopefully you'll come back and talk to us more about it. thank you, randy. randall krozner. >> tom: our week-long focus on the federal reserve continues tomorrow, as we look at the differences between the goals of the federal reserve and the european central bank. >> susie: the spanish government said today it does not need a bailout, despite the rising cost of ensuring its i.o.u.'s. the nation's budget minister said spain has the support of its european partners, and european institutions. an independent audit of spain's financial system is due out tomorrow. many worry it w

now what the independents means they'll get to live it up the fed the fed unlike the governor all the whole government lives up but the fed is really on the top of mount olympus drinking you know drinking nectar nectar of the gods they live it up to an unbelievable extent and they can determine their own expenses and so forth so that's that's what they mean it's not actually independent of the rest of the government to say and you're not buying said chairman ben bernanke is argument that this is going to open it up to the politics well the fed is of course a political organization all it cares about is politics all its all its whole its whole concern is just nothing but politics and my view bernanke is whatever he says believe the opposite then you would be right all right i want to bring up a california republican he's the chairman of the committee darrell eissa he said clearly quote clearly that must be made and must be to excuse me if that must be made too big to fail and too big to fail requires a considerable amount of oversight what do you think about that well i'm glad to hear

rate cut that's coming in i see coming is one of the reasons the fed could hold off if the fed thought the sea was not going to europe is just going to get worse they might have announced some kind of q e three now but they say they talk between themselves and me bernanke he said he talks to drug use one of the guys he talks to so they can see they're coming to the physician we can hold off on q e three into august september because the p.c.b. is going to pick their part of the slack in the meantime so yes i do expect the e.c.v. rate cuts to come first another question be why didn't those you see rate cuts come sooner the answer was the greek elections which we just said last sunday they didn't want to ease ahead of the greek elections because that makes it too easy on the greeks to keep the pressure on get the greeks to kind of do the right thing which they did then you get your rate cuts then you get your q e three so that's the sequence interesting i want to talk to you about europe in a second because you had a slightly different opinion than a lot of the guests on this show and so

and he is fed up with the fed's easing, does he think the central bank should step aside and let the chips fall where they may? >>> welcome back. we have earnings. look at this stock. if you look at straight numbers based on all of the earnings i have seen, you would think it would be down more. basically a meet on mps, and it traded pretty much down several percent right after the close, but has recovered just a little bit now down one or one a1% or . >> sanofi had two drugs approved, neither of which were block buster drugs, and the blood clot medicine was said to need more study. what's next for sanofi and the health care industry, joining me from the national convention in boston is the ceo, good to see you again, thank you for joining us. >> nice to be here, maria. >> i want to get to your most recent deal, of course, but let's talk about the fda and the reel ruling. how important it was to get that approved and how would you describe the fda for moving these drugs forward. >> we decided to build a company a growth platform that's can grow without r and d. if something runs into

fed -- we also will get new projections from the fed today.y are important. 2.65, going to be very hard to hit that number, would not be crazy to think that number comes down today, watch what happens at 13 and 14. also, watch the unemployment forecast. 7.9%, remember it went up last time. does the fed now raise their projections? the extent to these revisions will ultimately determine policy. if the fell marks down gdp and next marks up unemployment, that would be the underpinning for a more serious move. >> steve, i just wonder, in terms of the idea of outright purchasing, how much impact could that have when we already look at profiles, so much securities that have never been lower? >> i think that's a great question. i think the phet has to look at a couple things, two things exactly, cost and benefit. the cost to the fed is that it's harder to get out of the policy. the cost would come in credibility if it does something and has no effect. then the benefit would be, what if you're 1.6 on the ten-year note, 30-year mortgage ratings, they c

one thing the fed chairman almost pleaded for is help. help from congress in taking on some of the economic burden, or help in not messing things up more. >> a do-no-harm policy is what i am looking for here, at least avoids derailing the recovery in the short term, but combines that with a strong and credible plan that reduces the deficit over the medium term. >> reporter: as for the fed, bernanke said again and again no decisions have been made on next steps, but he added every option will be on the table when policy makers meet again on june 19 and 20. darren gersh, "n.b.r.," washington. >> reporter: i'm erika miller, still ahead, wall street's take on the fed chairman's testimony. "nightly business report" is brought to you by: captioning sponsored by wpbt >> tom: on wall street, investors didn't hear what they wanted from federal reserve chairman ben bernanke. and that put the damper on a strong stock market rally early in the day. the dow closed up 46 points, after surging as much as 140 points during the session. the nasdaq ended d

i know people are looking for an answer from the fed. but the fed is not it.he government shouldn't be a buyer of bonds anymore. it should be a seller. isn't that obvious? isn't that obvious to everyone except for the federal government? stay with cramer. >> coming up, ride the lightning. take a nonstop thrill ride as cramer goes stock after stock. all your calls taken rapid fire on the lightning round. and later, the business of hope. treatments are being developed to transform the lives of cancer patients. could this innovative technology have the potential to put this disease on defense? cramer's speaking to the ceo to find out. all coming up on mad money. >> on june 15th we're celebrating a fifth annual edition of "mad money." it's a family affair. >> check it out. >> want to join cramer in studio for this special event? >> a brotherly dispute. >> doctor is in the house. head to madmoney.cnbc.com to sign up for free tickets. >> the family that invests together stays together. almost tastes like one of jack's cereals. fiber one. uh, forgot jack's cereal. [

the fed is prepared to take further action. this does not expand the fed's balance sheet.ntinues to put a timetable on longer term bonds. the statement downgraded the fed's view on bonds, acknowledging that the softer payroll data has happened and stated that growth in employment has slowed down. household spending appears to be rising at a slower pace than earlier in the year. and it tweaked its expectations. and the unemployment rate will decline only slowly. people look at the differences very closely. so are investors and the rest of us. as the market expected it would. the dow jones industrial average is down about 13 points, having fallen for the fourth time in 12 sessions but it was down about 85 points at its worst. approximate r the worst certai

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i was making a strong case there for fed action. the fed can do things.eople say there's nothing the fed can do. it's "pushing on a string." >> so what the fact that he can easily do is tolerate a little more inflation. that it would allow inflation to go up 3%. and we can sit and argue about what we really think inflation is, but we measure the p.c. deflator. >> explain what that is. just keep it. >> personal consumption, what normal people buy. and then we go out and the government goes out and buys it every month and then writes down -- >> literally, it's this amazingly thorough process in which they go out and buy it. >> they calculate how much it costs. and so we can just say, look, we'll let that go to 3%, but we'll let that go to 4%. >> how does making that basket more expensive help people. how does it help the economy? >> the fed has -- i'm sorry. >> okay. there's several ways. the most stralgt forward way is that when that happens because people are spending more money, people are buying more stock. you believe in supply and demand, right? >> bu

but it's a relatively, in the greater scheme of things, a relatively small aspect of fed help or fed action vis-a-vis the european central banks. >> susie: so how bad do things have to get in europe for the feds to play a more active role? >> if there were widespread financial instability that was through contagion spreading globally, then i would expect there would be far more coordination. >> susie: i also asked dennis lockhart about what it it will take to get companies to hire more, and banks to loan more to businesses, and home buyers. we'll have more with atlanta fed bank president lockhart a little later in the program. >> tom: some encouraging news about the u.s. economy today, helped stocks move higher. the dow rose 92 points, the nasdaq added 21, the s&p up 11. here's the stronger economic data: orders for durable goods rose last month, as demand for built-to-last items, like televisions, washing machines and airplanes, grew by 1.1% in may. machinery and defense orders primarily were behind the jump. more homes went under a sales contract last month, a lot more. the nationa

how frustrated is the fed by that? what can they do? >> i think the fed is frustrated with it.ee whenever chairman bernanke testifies he focuses a lot on the housing market. the fed sent a white paper up to congress at the beginning of the year saying, we've done about as much as we can do. it's now up to you, congress, to do other things. that arrived like a lead balloon. there wasn't much focus on that. what the fed can do is try to bring the spreads between treasuries and the mortgage rates down even further. if they wanted to do so by buying more treasuries. but i don't think the spreads are particularly wide. we know the ten-year rate is down at pretty low level. so, it's really got to be on other policies to try to get the housing market moving. there's so many challenges in the housing market, different across the country. the fed, i think, has done almost all that it can possibly do and now it's up to others to try to work on that. >> if i may interject for a second. i think that the federal reserve probably will go in and buy mortgages and buy mortgage-back the securit

i think this time the fed wants to be ahead.ippery slope it's hard to pull someone back up. i am getting away from -- taking some profits if you will that have been occurring in high dividend stocks. i like the far east, emerging markets down. i think europe is going to come up a little. all of this is because of stimulus. it has nothing to do with fundamentals, don't fight the tape, don't fight a bailout and i will not fight the bailout. >> anttoinantoine, what are you? >> i think there are things sensitive to rates coming down. some will get hurt because pre payments will pick up speed, but the investment banks will have a lot of paper. a lot of fixed income refinancing that will happen. >> i was interested yesterday seeing those rails doing so well, transportation really leading things yesterday. today you have a bit on the banks, sustainable? >> sure, i think what you'll see as we see things getting beaten up in the marketplace, people will come reallocate into those sectors and start chipping away at them as they trade off.

thethe fed giving >>> the fed giving the green light to more operation twist, we'll call it 2.0.he ceo of a uk-based investment firm with $76 billion in assets under management. now helena morrissey wants to increase the number of women on corporate boards and has the support of the crown and country. >>> breaking economic data. >> good luck with your layoffs. i hope your firings go really well. >> thanks a lot. >> great. >> we'll get the closely watched weekly jobless claims number at 8:30 arm eastern. the third hour of "squawk box" begins right now. ♪ >> welcome back to "squawk box," i'm joe kernen. the music, it's too early for this. i'm joe kernen along with becky quick, the blender, andrew ross sorkin, our guest is ed lazear, university professor and former economic adviser under president george w. bush. we're going to buy one for the show just so look at it just for the show and you can get a look at it and take it home. it makes soup warm. >> it spins the stuff so fast it will make the soup hot. >> that i didn't realize. >> that's one of the, anyway. >> checking the futur

that -- what that does is to soent mutes thimpact of the fed's actions. that being said, i don't think it's at all accurate the federal reserve policy is not helping the broad public. first of all, many americans are able to take advantage of lower interest rates. many people have refinanced or bought homes. others have taken out loans to buy cars, auto loans are cheap and broadly available. so there has been impact through lower interest rates. but i think more broadly is the indirect effects. if a firm has a low o cost pital and we he seen a lot corporrrowate bog last couple years, then 'r m likely to expand, to add pil, to add products, and to which the payrolls have thoue increased the last few years has been disappointing, there have been significant increases and the unemployment rate has come down by two percentage points. some of that comes from the broad impact of fed policy on spendi, instment and effecaffect the broad itl by hiring and b promoting demand for products that people are producing. >> to kevin. and then ov to marcy. hi, than. vin h

bernanke who held a news conference after the fed meeting yesterday. the fed is committing 267 billion to extend its operation twist program. this is 45 minutes. >> good afternoon. before we get to questions, i'll summarize today's policy action by the federal market committee and place the committee's decision in the context of our economic outlook and collective judgment about the appropriate path of monetary policy. as indicated in the statement released earlier this afternoon, the committee is maintaining a highly accommodative policy. we decided to keep the target range for the federal funds rate to 0 or one-fourth percent and anticipate economic conditions are likely to warrant low funds rate through late 2014. in addition the committee decided to continue through the end of the year our program of lengthening maturity of our securities holdings, rather than completing the program this month as previously scheduled. specifically, the committee intends to purchase treasury securities with remaining maturities of 6 years to 30 years at the current

lou is that right well we'll find out soon enough the fed meets later this month so if they do reach into their toolbox for an instrument to screw your financial freedom how can you prepare we'll try to answer that now this was another hot topic with bernanke on the hill today. i'm talking of course about what's been dubbed the fiscal cliff of tax cuts expiring and spending cuts set to kick in all next year at around the same time now the concern is that washington will fly right off that cliff with no parachute except maybe a few golden one for the usual wall street executives and meanwhile the ratings agency fitch is warning it could cost the u.s. as aaa credit rating if congress and white house and the white house don't come up with a credible fiscal consolidation plan so deflationary threats looming but is a chronic lapse unavoidable michael o'neill is here with his inflation forecast and gold's recent slump has the mainstream media talking about a golden bear market threat but guesses reportedly even mine billionaire hedge fund manager george soros and he is not the only heavy h

yes, in that the fed didn't rule it out as a future strategy. so what did the fed announce? the u.s. federal reserve has decided to extend its current monetary easing policy. the move does come as economic signals are becoming darker. the central bank released a statement on wednesday, following its two-day federal open market committee meeting. >> incoming information suggests that the economy continues to expand at a moderate pace in the face of headwinds generated by the situation in europe. >> the statement warns that tension in financial markets around the globe triggered by the european debt crisis continues to post significant risks to the u.s. economy. it also acknowledges that growth in employment has pulled back in recent months. and consumer spending is rising more slowly. >>> now, in efforts to further lower long-term interest rates, the fed says it will extend the operation twist program by six months to the end of this year. under this program, the central bank buys and sells different types of government bonds to keep interest rates low. the fed plans to sell