no that's impossible the fed the fed is the biggest buyer of u.s. treasuries so if the biggest buyer wasn't there and wouldn't have prices going up but let me explain let me explain let me give you let me let me give you let me let me make the case so one can posit the fed's actions in the bond market are an attempt to prop up asset prices across the economy stocks other things and if the fed wasn't doing this and wasn't using the bond market to do this that asset prices would collapse and in this situation and deal leveraging people would go into cash and they go into cash equivalents like treasuries which are cash equivalent and people would pour in to a greater extent than now and actually push down even further now i don't i don't think that would happen i think that one of the assets that would be falling under that scenario would be bonds themselves and i think that's what would be the stock market would be the collapse and bond bond prices and a corresponding increase in interest rates it would be rising interest rates that would undermine th

by the fed when he spoke speaks in manhattan. also likely get questions about the fiscal cliff. >> absolutely and i think there is no doubt that global monetary policy will continue to ease. i think ben pen will step to the plate and allow everyone to know that the december meeting that's certainly the calendar guidance they have mid 2015, that will hold serve, but just in terms of market itself, there's a psychological term that's going on and you have a lot of institutional money managers that move to the sidelines. they're looking at a tape and it's not going down. they're slowly having to be in the market once again. >> well, psychology hasn't really changed. take a look at what the stocks are doing. ten-year lows. it's come a little bit off its lowest levels. still looking at a 10% decline today for shares of hewlett-packard. in you were watching cnbc in july, he said it have the autonomy deal that made him interested in shorting hp. let's take a listen. >> bought this company for $11 billion. it was a roll up of software se

actually acts to get out a hand in the fed wouldn't do anything about it people do think that the fed is going to do more of the nonetheless we keep hearing this and front page on the wall street journal today is that stimulus is likely in two thousand and thirteen bond buying is expected to continue and the conjecture is on the form or function it could take. well the operation twist is set to expire at the end of the year and that's where the government or the fed sorry is buying longer term treasuries and is short and is selling as short a dated treasuries and the speculation is that the flow from that let's say it's thirty or forty billion dollars a month is going to be matched by a new program of outright purchases. the argument could be made that twist is somewhat sterilized but these will be outright purchases meaning that there's going to be new money hitting the hitting the at least the banks reserve accounts so the they could purchase new treasuries but i suspect that they might actually be purchasing more mortgages and this kind of ties into the wind down that we're seeing

sense that the fed itself would. find all over addiction to and on bob english we've got you we've got ben bernanke and janet yellen as dr evil and many me behind me and that. is where we're going to end on thank you so much for being on the show today bob thank you. all right we have a reality check tonight because today we saw the headlines touting the news of u.s. g.d.p. growth revised upward to two point seven percent that's up from the initial estimate of two percent which we saw last month ok great news right well there were some calls yacht's in the revisions that were widely reported but we ask what does this mean at all this idea of g.d.p. as a gauge of the economy's growth and health well maybe not much if you consider what bill bonde or told us a few weeks ago. the g.d.p. numbers are to be the biggest frog in economics you know it pretends to tell you people think it says are you getting better or not is a g.d.p. growing or is it not but you know if i pay you to cut my log and you pay me to cut your log yo

all right let's switch gears from the treasury to the fed our guest has been decoding for some fed speak regarding inflation targets for fed chief ben bernanke he and his vice chair janet yellen what does rhetoric like this translate to let me give you an example of something janet yellen said recently in a speech and i paraphrased a bit but she said to put it simply if two percent inflation is the committee's goal two percent cannot be viewed as a ceiling for inflation two percent must be treated as a central tendency around which inflation fluctuates all right so what does that mean and why should we care and does this represent some kind of impact the major thing that we need to be thinking about we're looking at fed policy let's ask bob english because he is the one who's been reading these tea leaves so bob the the fed tealeaves you've been reading the fed speak you've been decipher and with regards to how they're talking about their inflation target. what's the translation why does it matter well first yes you should care everybody should care about price inflation but a little bit

fed stimulus like gillian 2013. we talked about this the second broke yesterday halfway through the 3:00 p.m. show. the man who wrote the article, wall street journal's chief economic correspondent and chief head head to lend us live. dave: before that is of we will tell you what drove the market with the data download. stocks extending yesterday's gains finishing a volatile session higher with the dow, s&p and nasdaq trading above the 200 day moving average for the first time in three weeks. telecom and health care were the top performing sectors. fewer americans filing first-time applications for unemployment benefits as hurricane sandy had the labor market and continues to subside a bit. weekly jobless claims fell by 20,000, seasonally adjusted 393,000. prior week's total was revised to 416,000. the hurricane play a role from 410,000. u.s. gdp grew at a revised 2.7% in the third quarter above the initial estimate of 2% reported last month. the commerce department attributes last quarter's increase to gains in pri

the fed chairman went into fed policy, the looming fiscal cliff and the recovery, said the economic recovery was continuing and largely positive about the direction of housing. i want to focus with you though on the fiscal cliff, because he centered on that and he did say that it poses substantial risks to the economy. in fact, it's already hurting. this was a fed chairman saying don't look to me to fix the fiscal cliff, rise above and solve it. >> could have been wearing one of our buttons in part of our speech today. he really basically said get your act together t is up to congress and the white house and the administration to hit the right balance between budgetary restraint in the long run and a do no harm policy to the economy in the short run. and he was absolutely crystal clear in his answers to one of the last questions there, scott, that if congress and the white house can't come together and we do a full thelma & louise off the cliff you can the fed doesn't have in its quiver enough arrows to undo the harm and that would drive it almost certain fly another recession. >> i thought

the fed has 22,000 employees.t clears your checks and your atm withdrawals and provides economic forecasts. but one of its most important responsibilities is regulating the nation's biggest banks, to be the watchdog. you're supposed to keep them out of trouble, so how did all this happen? >> well, a lot of mistakes got made, no question about it, but, you know, this was a much bigger thing than any single firm or any single individual. over the last dozen years or so, enormous amounts of savings has flowed into the united states and some other industrial countries. that savings has come from china and east asia. it's come from oil producers. and it has--hundreds of billions of dollars has come into our financial system. and, you know, that would be great if we took that money and invested it wisely and got a high return. but instead, our financial system didn't do a good job. we had a regulatory system that was like a sand castle on the beach. when you had little small waves just lapping up against the sand castle

. >>> infighting at the fed. ben ben speaks even as one of his own subjects congress may need to step in to stop the fed's buying binge. >>> the s.e.c. bringing charges in a massive insider trading case. now, even doctors are apparently being corrupted by cash. >> amazing stories, as you say. the major averages moving between gains and losses as they were really trying to for their first three-day winning streak in over a month but three did move learn bernanke's remarks, the fed did not have the tools to offset the full harm of going over that fiscal cliff. shares of hewlett-packard on the back of the story brian mentioned, currently a ten-year low and now down 54% year-to-date. we are going to break down all of those headlines for you in just a minute. but first, kate kelly for details on what is, by the way, the biggest insider trading case ever, right, kate? >> it is certainly being presented that way, mandy, i guess we will see how things go in court. yes, renewed focus own sac capital today in light of fede

manufacturing is slowing and businesses are worried about the fiscal cliff that's according to the fed's beige book out today what is the beige book anyway and who cares we'll tell you why it matters and word of the day let's get to today's capital account. when we talk about economic development or prospects on this show we typically talk about debt about private sector innovation we talk about monetary policy probably much of the time we talk about fiscal policy we don't often on this show talk about economic prosperity is primarily a function of political institutions but that's what our next guest thinks is the most crucial maybe we have it all wrong here at least if you believe political institutions play the role that james robinson does his research are a comparative economic and political development is the david lawrence professor of government at harvard university and is author of the book why nations fail so thank you for being on the show were excited to have you wanted to talk about things from this perspective but my pleasure. yes so what role do political institutions in

but the minute the fed stops doing that we end. it's reflecting that the economy as well so this is a very interesting dynamic one of the by products of this is that a foreign investor investing in the u.s. in the u.s. stocks actually gets a two to three percent volatility subsidy for the first time in the history in the history of in the history of water markets wow what do you know will critical stick right there because i want to talk about what this means for the yen to you in the japanese bond market so we'll have more with chris call managing partner of artemis capital management fund in just a moment and also still ahead with black friday the biggest shopping day of the year coming up in the u.s. could protests a back to one of wal-mart's most profitable days and what are other big box retailers doing that are so different from wal-mart but first are closing market numbers. more news today violence is once again flared up. these are the images the world has been seeing from the streets of canada. surely corporations rule the

the fed has forced people off the the risk spectrum.rcing them into things with yield. >> ben, this market continues to come back here. are you still going to buy into this right now? >> absolutely. i think this has some leks. if you missed the opportunity, you'll probably see a few more pullbacks going into december. in the meantime, i think the general trend is still to the upside, whether you're a technical analyst, fundamental analyst. i think the biggest risk is as was just stated, an interest rate risk. huge exposure for interest rates moving to the up side. >> all right. good to see you both. talk to you later. as we go around here, we are well off the lows of the day. we were down 94 on the low of the day. now down 12 points on

fed action and monetary policy you know to this extent you have this dichotomy where it investors are anticipating that lower of all they push down realized an implied vol but there's still this disconnect between the health of the economy and in this pent up demand for risk that is then pushed out on the longer end of the term structure so i want to now would you like to use a sort of like a cancer patient and the fed is just applying monetary morphine so that that patient has a difficult diagnosis going forward even though even though they might feel better in the short term so in the short term that risk is being shown by low spot fall but in the long term the risk of that cancer is being reflected in. so then how can people accurately head against risk and what do you tell to average folks that are trying to gauge the impact of the cancer and the drugs that are being used to treat it but maybe aren't long term solutions to the illness. well it becomes a very hedging in this environment becomes a very tricky question because you know people talk about tail risk insurance today well

what you have them doing is financing speculation and they're doing this with cheap money from the fed they're benefiting from an implicit bailout guaranteed by the government so how do you and your framework analyze the impact on a society of an extract not political institution but banking system yeah i mean i think that's i mean are you i agree with a lot of what you say i mean i do i mean i think it's i mean i think financial set financial system is crucial for successful economic development you know you need a financial system to channel credit well to people with good ideas but no capital so so you know one can have integration in the financial system as well but i completely agree with you and in some sense the financial system bounced out of recession in even worse shape because it's even more concentrated than it was before you know because of all these things going on but i would so you know the political system has to get that under control but that's not so you know there's lots of ways not to do so for example this business so if you think about it is an example you know

liz: david, you get don't fight the fed theory, but say people shouldn't look at it through fed-colored glasses. explain what that mean, and how should we look at the market and be looking at the allocation of the funds? >> well, it's something we've. talking about since qe3 or qe infinity came along. certainly, we believe the montra, don't fight the fed, especially the fed, ecb, and other central bankers with easy money policy. it is important force in the markets and provides underlying support for asset prices, but it's, you know, keep an eye on other fundmentals as well. they matter. david: david, your picks suggest you are bullish on the economy and the effect of what the fed does on the economy because they are housing picks. your for eagle construction, i shares, a basket of shares in the dow. you think the housing boom is -- could be -- could be right on the verge of a much stronger housing boom than we've seen? >> yeah, well, i think the data we got in the last couple days confirms that. yesterday, 10.9% year over year growth, existing home sales today, and new building starts

goes on a spot vix or realized level so in this this is actually very quantifiable the minute the fed stops expanding their balance sheet we end up getting a volatility spike we saw this we saw this during just prior to the flash crash in two thousand. and we saw it just prior to the crisis in august of two thousand and eleven so you know it at this point really volatility is being defined spot volatility is being defined by fed fed action and monetary policy you know to this extent you have this dichotomy where if investors are anticipating that lower of all they push down realized an implied ball but there's still this disconnect between the health of the economy and in this pent up demand for risk that is then pushed out on the longer end of the term structure so i want to now would you like to use a sort of like a cancer patient and the fed is just applying monetary morphine so that that patient has a difficult diagnosis going forward even though even though they might feel better in the short term so in the short term that risk is being shown by low spot fall but in the long term

bonds the balance sheet of the federal reserve today is the same size as it was two months ago so the fed a reserve has to put some juice into the system is that once you get the stock market rising as a really interesting and good point now let's talk about what has returned the most to during the last obama term there is this great chart i'm going to put it up for our viewers and it shows all of these different assets and what they've returned and gold and silver lead the way now we're told by neoclassical economists and policymakers that the fed needs to print and we need to spend to get on a good growth track and rebuild a healthy economy but what does it mean that a non dividend yielding asset two of them actually have performed the best out of all these financial assets. you know it's not really a return on gold it's just the appreciate. gold or to be more precise the appreciation depreciation of the purchasing power of the dollar you know gold buys the same amount of crude oil it did four years ago same thing with silver what's happened is the dollar purchase a lot less because of

fed policymakers say the strategy is helping financial markets, auto buying, and housing. that's why economist think the fed's buying spree continues into next year: >> a number of participants continue to expect that they are going to replace operation twist with straight asset purchases once operation twist expires in december. >> reporter: the fed has been buying back about $85 billion a month of long term bonds and mortgage backed securities. in minutes of its last meeting release today, fed officials, "generally agreed that a recovery in housing activity now appeared to be under way." but while it sees signs of life in the housing market, there are continuing concerns about the stubbornly high unemployment rate. late tuesday we heard from the fed's vice chair, janet yellen, she says short-term interest rates may need to stay near zero until early 2016 to spur employers to add employees to their payrolls. that's at least six months longer than currently expected. >> there's still three or four million fewer jobs than before the recession began. so that's the focus of t

cheryl: interest and other fed in bringing charges against steve cohen. it appears even though he hasn't been convicted or charged with insider trading or anything some investigators are likening him to the head of an organized-crime family. senior correspondent charlie gasparino have a latest. charlie: i am not likening him to that. as i have set i think insider-trading is a victimless crime. although you do go to jail for a long time if you trade on material nonpublic information. the feds believe there's a lot of that stuff going down at sec capital. fox business has learned they are investigating steve cohen and have been for many years and we were first report that in 2007 they tapped the phone and got a court order to tap the phone in his home where he conducts his business. lot of interest in him. the interest is so high, they really do believe this is a problematic firm, and news sources close to government investigators and the fbi has an organizational chart of sec capital, it looks just like one of those mob charts. we are getting this from sen

the fed is buying it. the irony is if rates were allowed to rise and it went to two and a half percent you would get more of what the fed is trying to accomplish. again this is the fed's view, not mine. the committee is now bought into bernanke's view of the world. >> in the coming weeks and months as we get economic data will we see the cliff already reflected in that data? how much of the impact of the cliff is already on businesses in the data? >> i think as the wall street journal highlighted earlier in the week you have seen business confidence deteriorate, durable spending, big ticket ex-cap items. some is europe. it's already happening. on the consumer side they are beating to a different drum. if we go off the cliff we'll have problems because the consumer isn't prepared. our baseline case is we'll avoid most of the cliff. there will be deal to make a deal next year. growth will continue. >> okay. joe, we'll leave it there. thanks for coming by. >> thanks for having me. >> great thanksgiving. joe l

the fed has spoken. it's been clear about what it's going to do and how long it's going to do it for. i think the market's pretty well attuned to how any changes in jobs will change the fed outlook. these numbers do not change the fed outlook. >> ed, you have to make money in this environment. what do you do? is this a buying opportunity? >> not particularly. you have to look at the technical indicators and see where we're going see a breakdown. i would be putting no money to work right new. because of this election, if we see romney elected, we'll see oil prices drop. you'll see energy prices drop. that might be a buying opportunity at that point. other than that, i really believe we have to just take a look and see attitude right now. >> well, one of our guests, a regular on this program, had a great idea. he said to me, maybe for one month the fed instead of putting that $40 billion of mortgage-backed securities buying, put that on hold and send it to some of the ravaged areas like staten island, like

and for reference because mr turk referred to it here is a look at the fed's balance sheet since two thousand and seven of course you can see major increases however if you focus in on the last year over there on the far right you can see it has been relatively flat which was exactly what he was talking about not enough liquidity to feed that drug addiction of the markets and still ahead there were more protests in greece as thousands marched on parliament while politicians voted on the country's austerity budget that's right the euro zone crisis is still a brewing we will get james turk new from the other side of the pond but first your closing market numbers. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else and you sure see some other part of it and realized everything you thought you knew you don't know i'm tom hardy welcome to the big picture. thank you welcome back from the euro zone crisis yet still going on to the debate over the boom does bank gold reserves and if there are accounted for truly i continue talkin

and for reference because mr turk referred to it here is a look at the fed's balance sheet since two thousand and seven of course you can see major increases however if you focus in on the last year over there on the far right you can see it has been relatively flat which was exactly what he was talking about not enough liquidity to feed that drug addiction of the markets and still ahead there were more protests in greece as thousands marched on parliament while politicians voted on the country's austerity budget that's right the euro zone crisis is still a brewing we will get james term view from the other side of the pond but first your closing market numbers. download the official publication so choose your language stream quality and enjoy your favorite. t.v. is not required to watch on t.v. all you need is your mobile device to watch our t.v. any time. the issue is that so much is going on in which of course you want to leave you america's political phone has finally come to an end there was a really good choice to what degree was this campaign season only about. the old. techno

the banks have a chance to submit their results to the fed, and the fed is going to come back more quickly and say, no, try again. rather than fail people right away. they'll have a chance to put a final submission in by early january. i think that's really good news for the banks. i think particularly for the banks that got rejected last year like citi and sun trust. i think they're going to be able to push the edge of the envelope. the fed may push back. it will be give and take this time and a much smoother process. i completely agree there's plenty of capital in this industry. buybacks and dividends. we talked about it last year. we didn't get what we wanted. i hope we get more this year. i expect we will. >> one bank stock you would buy right now, anton. >> i would buy citi right now. >> all right, guys. great to have you on the program. thank you so much. we appreciate your time tonight. see you soon. really appreciate it. up next, mixed signals at jcpenney. we're going to tell you about it. the retailer is mailing a letter to customers explaining its shift away from coupons. get thi

fed's balance sheet hasn't been translated into monetary growth.re growing around 8%, but that size of balance sheet, if they focus more carefully on the problem between lender and borrowers, an the regulatory structure -- >> why is that a problem? is it a credit problem? is it a problem where people just have, you know, hidden their heads in the sand? what's that? this is the first time probably since the '30s, lee, that the central bank has pumped in all this money and it hasn't work. as you say, if it was going to work, it would have worked. it's not been changed by the most dramatic increase probably in our history, and a rad cam change in the center bank. it hasn't worked. why hasn't it worked? >> well, because what they did essentially was pump up their own balance sheet, which you know we call high-powered money. the next step to translate that high-powered money into the money of the pockets of borrowers and lenders is to start making borrowers and lenders have an opportunity to do it. the reason that borrowers and lenders can't do it is ba

and gold and silver lead the way now we're told by neoclassical economists and policymakers that the fed needs to print and we need to spend to get on a good growth track and rebuild a healthy economy but what does it mean that a non dividend yielding asked that two of them actually have performed the best out of all these financial assets. you know it's not really a return on gold it's just the appreciation of gold or to be more precise the depreciation depreciation of the purchasing power of the dollar you know gold buys the same amount of crude oil it did four years ago same thing with silver what's happened is the dollar purchased a lot less because of all of this money printing you know what the federal reserve has been trying to do is to jumpstart the economy by printing all of this new money quantitative easing that's what they call it but it really hasn't had any impact you know q one didn't have much impact q e two didn't have much impact and it's unlikely that q.e. three will either all it will do is continue to depreciate the purchasing power of the dollar and as a consequence

i think the one thing that the fed has done, the fed can't control corporate earnings. they have taken a lot out of the markets. i think the strategy that we have we don't have clarity. it means long short strategies are going to make imminent sense. it will remain very good places to be and i think it will look better after tax than if we were getting cash. >> we have people reaching for gold at this point. you like the gold minors. you say they are cheap which we don't often hear. >> one of my grandmother's favorite lines. the gold mining stocks, the only other sector that destroyed share holder capital more than old mining stocks have been airlines. they are trading cheaply. the point on the fed is that real interest rates will remain negative and gold is heavily correlated with real interest rates. i thought gold and gold mining stocks are the place to be. >> do you think the fed will step in sewing that there will be a gap on fiscal policy, that the fed will stip in and embark on an easing program to provide a stop gap measure? >> i think that we know that operatio

and they said the fed's role in the fiscal cliff negotiations is to communicate. >> tell the world and the individuals in the political establishment that they have to help get their act together or we have a problem, and that notion of preaching from the pulpit that he has is very fundamental. >> susie: is there another role or more of a role for the fed? >> i think to be a cheerleader and to be on the sidelines telling the government they have to do what is right for the public. >> susie: as for what the fed can do if the u.s. heads into recession because of the fiscal cliff, bernanke says, not much. >> in the worse case scenario, where the economy goes off the broad fiscal cliff, the largest fiscal cliff, which, according the c.b.o. and our analysis, would send the u.s. economy into recession, i don't think the fed has the tools to offset that. >> susie: members of the audience agreed. >> he was very frank in saying, you know, "we can try," he essentially said, "we will try, but we don't have anything in our arsenal that comes close." >> susie: bernanke is already using the weapons