the fed failed its major test.asked economist lester chandler for an explanation professor chandler, the fed was set up to pvent bank failures and avoid depressions, all of whichappened in the 1930s. whatent wrong? within the federal reserve system, nody knewwho was too what where the resee actreserve was coerneystem, r one cel bankwnthe aldricpn wihes aat wasupposetoosomeing cen, oa fel reserve ar t they coun'cidewho was do. i'll we didt vey. very many central bankers aat wasupposetoosomeing cen, oa fel reserve ar in this country in 1914. central baing was not a recognizedssion. fearful that the united states was not a safe harbor, foreign investors withdrew their gold deposits in a srt time,$30 milli. from american banks. we asked dr. andrew brimmer, former member of the federal reserve, why gold alarmed the fed. dr. immer, in 1931, foreign investors were pulling their gold out of american banks. reserves were being depleted. what does that doto? what does e reserve do to try to combat it? for the banking system

they're reading about the fed.talked about the fed until four or five years ago. it's a big issue. money is a big issue. it is one half of every single transaction and we don't even know how to define a dollar. david: could it become a big issue in the next presidential election perhaps we should have a fed. >> i think it will continue to be a subject because people now know, growing number, growing by leapses and bounds the fed doesn't give us nirvana, doesn't give us perfect economies. and they can't do much now to get us out of them. david: you're young and spry. you may not be running again but will you lead the charge? >> probably not. maybe philosophically i will be involved and try to influence young people who are energized and they energize me. campuses are alive and well. they want to talk about free markets and liberty, across the board how it affects foreign policy and nsa. they're interested in how our privacy is intruded upon. i think, i think there's a lot to be optimistic about on the long run but o

counting down to the fed. markets bracing for the fed to perhaps scale back on quantitative easing today. but how big might that pullback be if it does come. plus ben bernankes's news conference in about 45 minutes. it's all market moving news and cnbc is all over it. the dow is down 40 points. we're back in two. [ female announcer ] it's time for the annual shareholders meeting. ♪ ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ ♪ ♪ ♪ [ engine revs, tires squeal ] [ male announcer ] since we began, mercedes-benz has pioneered many breakthroughs. ♪ ♪ breakthroughs in design... breakthroughs in safety... in engineering... and technology. and now our latest creation breaks one more barrier. introducing the cla. starting at $29,900. ♪ ♪ [ tires screech ] ♪ ♪ [ male announcer ] 1.21 g

there are fears that the fed could fuel inflation, but the fed sees no harm of that right now and canee no harm to a fragile economic recovery. and to everybody's surprise the fed will not change its bond purchasing program at least for now. that's the perspective from the fed. as for business leaders, they also remain cautious about the economy and say they're hiring as a result will remain flat. according to results of a business round table survey just 32% of ceos say they expect to hire more workers in the next six months. the dysfunction in washington over the budget and the debt ceiling also adds economic uncertainty. president obama met with members around the roun round table and addressed that concern. >> i think this is the time for us to say once and for all we can't afford these kinds of things. i know the american people are tired of it. i'm tired of t and i suspect you're tired of it, too, because it's tough to plan your businesses when these things are looming at any given moment. >> the outlook in the current quarter to key factors in economic growth. cooperate america

you heard from ron paul, the hedgage about the fed. >> i think the quantitative easing fed is doing hason the economy. i don't think that is the big deal. the big deal would be getting the fed to focus on building up financial excesses that would require a change in its mandate. david: well, a lot of people say that it has adopted too many mandates. now it has adopted in addition to keeping the dollar stable, in addition to keeping unemployment down, both of which it had questionable success at if any, it's added keeping the stock market happy to its mandates. do you think that is true? >> certainly seems as if there is a big interest in asset markets. what the fed needs to do is not targeting the stock market or any other asset market but try to say, can we spot the buildup of financial imbalances? if we had done a better job of that before the crisis we wouldn't have to spend so much cleaning up. david: what you mean by that specifically, stop speculative bubbles, right? >> just to pay attention, to identify. if it is not part of the mandate, the attention won't be paid. currently the

what have the fed made of the fed's move or not move?you our guests have been telling us in the last hour or so. >> i think the trade is -- well, you want to be sort of long the ten-year area. i think i've got further falling yields. i think to see the curve flattened in the u.s., i think you can probably see the ten-year u.s. outperforming bunds in the rally. >> gold up 3%. you know, this policy is going to get growth, which i think is pretty clear. commodities should do pretty well. so i think it's a very clear signal from the fed that they want to see more growth. that obviously translating to better global growth. it should be good for the commodities complex, of course. >> i particularly like some of the things going on tonight. the power company, they produce enormous amounts of peak power and they're going to start. at the moment, the way the iceland monetizes the power is exporting big blocks of aluminum. >> all right. so that's the reaction to the fed. we'll talk about it more, as well, in the next half hour. before that, our fi

the fed. a lot of the tapering's already priced in. >> right. >> back in july -- >> that's up for debate, too. >> back in july, the five-year note was at 135 yield. back then, i said it would probably move to core cpi. core cpi today is 1.7%. so maybe another 10 or 15 basis points on the upside for what we know about the economy today. but rick's right. the future can hold anything. >> so you would put new money to work, then? >> in the stock market, absolutely. >> go ahead, rick. >> still holding to 1,750 for the end of the year. >> maria, the good news -- >> no, i agree with everything he said. the problem is i talk to so many sources and so many traders and saying that taper is priced in is very logical. and it borders on conventional wisdom. >> we have no idea if it's true. >> right. nathan, what do you want to say? >> what i was going to say is the good news and the bad news on tapering kwo be for emerging markets right now. i think we're pretty well set to gh here. i don't worry too much

on four dates since that fed decision. >> we had the massive rally wednesday and euphoria of the fed doing nothing. in three days we gave it back and had the fourth day. investors aren't used to this. they're used to the fed giving the market what they want and then the markets responding with sharp rallies. the s & ps are up about 20% this year, and i argue that a lot of that has to do with the fed. well, here the fed was incremental in giving the markets what they wanted and the markets aren't following through. it was 2008 was the last time that the fed was easing but the markets ignored it because obvious lit system was on the verge of collapse. this time around i'm wondering what's going on. there's something different here. the market's saying something. >> what is trumping the fed in this case? is it concern over a government shutdown, over the debt ceiling debate that we're going to face right after that? is it concerns raised about terrorism in the wake of what went on in kenya? what is it? >> it could be those. but i'm wondering if maybe the stock market which has used the

on four dates since that fed decision. >> we had the massive rally wednesday and euphoria of the fed doing nothing. in three days we gave it back and had the fourth day. investors aren't used to this. they're used to the fed giving the market what they want and then the markets responding with sharp rallies. the s & ps are up about 20% this year, and i argue that a lot of that has to do with the fed. well, here the fed was incremental in giving the markets what they wanted and the markets aren't following through. it was 2008 was the last time that the fed was easing but the markets ignored it because obvious lit system was on the verge of collapse. this time around i'm wondering what's going on. there's something different here. the market's saying something. >> what is trumping the fed in this case? is it concern over a government shutdown, over the debt ceiling debate that we're going to face right after that? is it concerns raised about terrorism in the wake of what went on in kenya? what is it? >> it could be those. but i'm wondering if maybe the stock market which has used the

to the kaiser report imax kaiser so ben bernanke he is all print no taper as we said all along the fed will never taper it was a hoax from the way the very beginning but then you don't become the greatest hedge fund manager in history without duping other market participants first. execute trades based on mark manipulation and trading on inside information do you think. it would appear that the fed as you have said many times all along many of our guests have actually said is that the fed is like a hedge fund which apparently is something that warren buffett agrees with and thinks is a great thing the federal reserve is the greatest hedge fund in history says warren buffett the eighty two year old who has led berkshire hathaway for more than four decades hailed the fed's ability to make money from bond purchases as a result of quantitative easing which in five years has more than tripled its balance sheet to more than three point six trillion dollars the fed is the greatest hedge fund in history he said yeah right ok it's a four trillion dollar hedge fund so if they want the price of s

banging the drum for the fed policy of continued quantitative easing druckenmiller fed robbing poor to pay rich the federal reserve isn't just inflating markets but is shifting a massive amount of wealth from the middle class and poor to the rich according to billionaire head. manager stanley druckenmiller and let's turn to this little clip from c.m. b.c. i was approached to assure markets i love this story ok because this is very interesting it's for every rich person this is the biggest redistribution of wealth from the middle class and the poor to the rich ever who owns the assets the rich the billionaires you think warren buffett it's a stump and you think i hate this stuff i had a very good day yesterday ok right well stanley jumping miller of course is. a rare ray of sunshine into this corrupt swamp of wall street and d.c. and financial media and he's pointing out the obvious that quantitative easing is a well transference mechanism and the people who get this wealth believe that they're the chosen people they believe that they're god's chosen bankers on earth that they have t

did the fed miss an opportunity. >> that's a sign of every successful recovery is the fed reins in its stimulus. i think they had an opportunity. obviously the markets leading up the last several weeks fully, most of us, all thought they were going to taper and the market seemed fine with it. the s&p before yesterday was close to highs, the market was being led by economically sensitive stocks, didn't look like it was very fearful and now they didn't taper and they've created a lot of uncertainty as a result. they're going to have to eventually come back and taper sometime and now they've created a lot of uncertainty around it, which they probably could have avoid avoided. >> mr. bernanke was saying he was a little about the economy. are you? should we be? >> you know, tyler, i don't think so. i'm fairly pleased with the reports coming out. today's a great example of that. across the board today from unemployment claims to housing to leading indicators to the philly fed all suggesting acceleration in the economy. we have for the first time ever simultaneously expansion going on in manu

this is the fed statement.pened, as the news broke we can cycle through some of these charts as we continue this, the market just skyrocket. an all-star panel to break down the big fed surprise on the tapering. managing director with pimco, wayne angell. we did the 10-year yield down slightly and the vix down. we have stuart friedman on the stock side. speaking about how the market really reacted and finally wayne angell, former federal reserve warboard governor, real insider. i will begin with you, did this surprise you they did not taper? they did not hammer it. >> no, this was not surprising at all. meetinghouse am a people don't understand chairman bernanke does not quite get it. chairman bernanke thinks the fed is an uneasy stands, but the fact of the matter is the fed is driving is 1 foot on the gas pedal and 1 foot on the brake. gerri: people with 401(k) are thrilled. the s&p jumping well above its previous highs. the first thing it did was went from 16 and change to 1705. now you see it is now. does it

no tapering by the fed.d it seems as long as they continue this, it's going to be harder for them to get out of this, meaning the fed's going to have a really hard time coming back and doing any tapering at all, so they really don't see an end to it which is somewhat of a scary proposition, but the stock market seems to love it for now. ashley: up for the markets. all right, sandra, thank you very much. tracy: let's continue with that market talk. doug, i mean, come on, you've got to be somewhat happy about this. we're up 130 points. equity world is doing the happy dance right now because, to sandra's point, the longer you're in, the harder to get out. who knows what's going to happen october, december. >> well, in the short term it certainly helps my strategy. we've been saying get out of the defensive trade, get into the market. risk assets are the place to be. that's how you build wealth, and so in some respects it helps, but i'd rather it be driven by fundamentals in the long term. ashley: yeah. >> this

waiting for the fed tomorrow. right now the dow's up 38 points off the highs for the session. >> gm launching a new cheaper electric car that will be about 50$,000 cheaper than tesla's electric charge. which will put a charge in your portfolio? >>> the fed spills over into full-on fight between president and senator. or does it? hear one theory about why president obama may not nominate jan janet yellen. you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪ >>> welcome back. in case you hadn't heard, microsoft out with a huge buy back and dividend increase announcement. it's not close to leading the dow today. what's driving today's move higher? >> boeing, one of the best performers in the dow today. defense and

this has been a handoff from the bernanke fed to the yellen fed.fed that is dovish with a capital "d," that tapers less slow -- that tapers less fast, more slowly, that ultimately provides forward guidance and keeps the policy rate at 25 basis points for a long, long time and it's why you want the front end as opposed to the long treasuries in a marketplace. that's why we've done real well today. >> does this increase the risk by pushing this up, keeping essentially a dovish stance, for longer? does it at the end of the day increase the risk of a stock market crash? >> well, that's, you know, what jeremy stein indicate ed six months ago and i think there's credence to that. the taper talk which began three to four months ago was a result of the speech by jeremy stein that suggested that asset markets were bubbly and it took a taper to sort of take the bubble out of the markets. perhaps we're seeing that back in place today, but the fed cited financial conditions and it seems that yellen has won as opposed to jeremy stein. we're going to see going f

>> i think uncertainty about the fed. the fed not be a thing about uncertainty.be stable but something the central bank hasn't practiced for decades. david: steve forbes, with the "forbes on fox" on fox news channel, every saturday morning at 11:00 a.m. god we're patting each other on the back here. >> no one else will do it. david: cheryl is getting too much. back over to you. cheryl: you are the host, that's true. coming up, everybody, tired of buying expensive razors every month and forgetting to replace them until too late? we'll speak to the ceo and founder of the dollar shave club. it's a startup everyone is talking about. he has another bathroom product. mens wipes. are you confused? take a listen. >> fortunately there's a better way to wipe your messy bottom. called one wipe charlies. butt wipes for men. >> butt wipes, mike? [bleep] >> yes, butt wipes. you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the be

nanki to stay on this fed chairman buffett said that the fed's eventual exit from its monthly bond buying program will carry unforeseen risks quote we are in an experiment which hasn't really been tried before he said adding that quote buying securities is usually easier than selling securities right i quite this was swallowing a porcupine that day when you swallow a porcupine the quills are facing out and it goes down without a problem but then try ripping the porcupine out and the quills are now facing the opposite direction in a rip your entire sophos apart and this is the what awaits the chairman when he tries to sell his way out of his predicament but of course he'll never ever sell is way out of his predicament because before that even becomes an issue they'll be a global crash which will precipitate a global conference to re architect the global financial system and the u.s. dollar instead of just crashing on the merits of having a psychotic named ben bernanke in charge it'll be a crash because there will be a new central world government that will reprice the dollar about forty pe

to congress the republicans in congress voted to cut forty billion from food stamps so you know the fed printing is of course going to make the price of everything rise including food but you know just for you out there i want to show you this definition just from google of what a hedge fund it is and ask yourself whether or not you want this from a central bank which is supposed to provide monetary stability and price stability it's a limited partnership of investors the limited partnership being the banks on wall street and a few rich guys that uses high risk methods such as investing with borrowed money in hopes of realizing large capital gains right wont the fed is leverage fifty think now it's close to sixty to one same thing with deutsche bank in germany and they have a portfolio of bonds and those bonds because the economy in america is not adequate enough to pay the coupon or interest rate on those bonds the fed itself has to buy its own bonds or the treasuries bonds and they do this by creating their own money and they go into this vicious cycle and you point out that while war

he writes the fed's nontaper and forward guidance should give a clear message of what the fed wants.the next few years, they want growth first, growth second and growth third. with the stabilization of europe, the apparent pick-up in china, note higher dry bulk index and u.s. economy's still unreasonable footing despite a slowdown in housing. the heavy leaning to a growth policy should lead to a favorable environment for the markets. that's certainly what we've seen and how the markets across the board have been responding. >>> when we come back, we've got breaking economic news. we're just a few minutes away from the closely watched weekly jobless claims. as we head to a break, though, again, take a look at the u.s. equity futures. right now, looking at the dow futures up by about 25 points. "squawk box" will be right back. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're li

users fed it to other websites.tube the genie was out of the bottom h bottle. you can see the snarky ad orbiting in cyberspace at plenty of other sites. the question whether microsoft is to happy to let the little show go on and on and on. dave and liz? david: sounds snarky. image of steve jobs. not nice. liz: a little tasteless. david: thanks, dennis. >> okay, guys. liz: when it comes to outdoor gear, rei built a huge business partly by makeing a cast iron guaranty to the customers. guess what? now the times they are achanging. details in just a moment after a couple of people abused it badly, david. ♪ this man is about to be the millionth customer. would you mind if i go ahead of you? instead we had someone go ahead of him and win fiy thousand dollars. congratulations you are our one millionth customer. nobody likes to miss out. that's why ally treats all their customers the same. whether you're the first or the millionth. if your bank doesn't think you're special anymore, you need an ally. ally bank. your money n

did the fed surprise you today, did the fed do the right thing, and are you and your shareholders happy this evening? >> last question first, very, very happy, tyler. you should be happy. did it give us a surprise? yes. the fed gave us not only no taper, but i think importantly, very dovish modifications of the unemployment rate, which might mark the beginning of policy rate hikes at some point perhaps as far out as 2016. not only did bernanke dismiss the 7% target that he was using, you know, for taper, almost like a magic slate, but the 6.5% level, which he had referred to before, you know, you suggested that that didn't apply either, and that it might have to be considerably lower to precipitate higher interest rates. so this was a positive day for bonds, a positive day for higher prices. and lower yields. >> randy, how did almost everybody get it wrong on wall street? i mean, we had so many people on tv all over the country, on various different networks, talking about the fact that the fed was going to taper and that it was kind of baked into the market. how did they get it all wro

>> i don't fight the fed, but on the other hand the fed comes out today. they cut gdp growth. >> right. >> they cut core inflation. so, look, the market is probably going to like this. but this market rally has been p/e expansion. we need for stocks to go materially higher, we need earnings growth. and i don't know where earnings growth is going to come from with gdp growing 2%. >> this is a good opportunity to get at you, get out on a high. would you be a seller? >> i'm not a short-term trader, larry, but i'm bullish about the long-term. but i'll tell you what. i'll buy this market if they get their act together in washington. tax reform, entitlements and maybe immigration. let's get that fixed in washington. >> good luck on that. kenny pollicari, what did you take away that would apply to the next couple of months? >> i think you to be quite concerned. jim said it and ron said it and you said it. people should really be concerned that we're not nearly as far along as everyone would think we are, or as even they led us to believe we are. so i think you ha

again, it's a don't fight the fed. there's definitely a wealth effect the fed is trying to create. talked about many times. do not short this market. you're risk of getting hurt shorting the market is a lot more than your risk of missing a move. >> do we not get a meaningful correction until the tapering begins? >> i believe that's the case. we'll trade here. we'll trade higher. we may flap around in here a little bit. i definitely don't think we'll see a 5% or 10% correction any time soon. >> keith, always good to see you. after a record gain yesterday, a mere 40 point pullback for the dow today. s&p down about three points on this trading session. stick around. the second hour of the "closing bell" with maria bartiromo is coming up. don't forget the interview with warr warren buffett and b of a ceo brian moynihan coming up as well. i'll see you tomorrow. >>> it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. market struggling today, a day after closing at r

is your movie critical of the fed? >> we do take a critical look at the fed.spective and try to get the fed credit during different times in its history. when it got things right, but if you look at fed history there are a number of times it's gotten things wrong and we take a hard look at that and try to show people the impact of fed policy, you know, not just on our economy, but on people's lives. >> do you take a position whether or not the fed should be apolished. a lot of libertarians want it gone. they don't like this thing. do you take a position on that? >> i think we don't, we don't call for the end of the fed, but we do question its current policies and question whether they're on the right path. whether they're creating another perhaps bigger problem, if you look at the last 15 years, since the stock bubbled in the 90's, each time the fed responded to a crisis they've created a new larger crisis. so, we definitely call into question the path they're on and what they're doing, but i think if you look right now at the role the fed is playing in the st

part of the fed's impotence in the opponents of policy what the fed wants is either extremely low real rates or even negative real raise they want to situation where inflation is higher than the ten you know. does this put the ten year note at say three percent you've got to get the four percent inflation a three and a half percent inflation to have negative real rates what's been happening is the opposite nominal rates are going up inflation is going down so real rates are getting higher and this cools the economy so i mean we'll see what happens with the fed tapering my view all along as if they won't taper but it's a really close call but the let me jump in really about thirty seconds left isn't there a huge problem i guess you could call the transfer mechanism between what's happening in the central bank level and that money getting into the real economy because it's being aborted by the banks to get in the middle or using it to lend back to the fed or to speculate or to buy assets and again this predatory banking class is becoming highly destructive i mean this is part of financia

the west on the fed bail without a look the fed has taken a bouncy from eight hundred billion to over three point two trillion in the last four years we haven't had a crisis since two thousand and nine there's no shortage of liquidity if they've taken their balance sheet to over three trillion without a liquidity crisis what are you going to do if we have a liquidity crisis which i expect they can't take it to six trillion or nine trillion they're at the limit the fed is technically insolvent on the mark to market basis they don't have that capacity so the only clean balance sheet left in the world is the i.m.f. so when this crisis happens the only way going to be able to reliquefy the world is by printing us three hours later when he said there was no a liquidity crisis back five years there there was a liquidity crisis yes they met their liquid through i said by expanding their balance sheet and what you're saying is that unlike that period this next wave will overwhelm any capacity for the fed to expand to what would need to be thirty trillion carets actually in bad debt so it's li

fed chief charles evans, from chicago, he said we need to see the jobs report before the fed begins its slowing down the bond purchasing program. liz: apple has cheaper iphone on tuesday. other apple news. ebooks case judge said she will appoint a monitor to oversee apple's antitrust compliance policies and bar the tech company from further violations of the law. david: on specific company news, smithfield foods agreed to be bought by china's shangi international. was hurt by lower exports to key international markets. liz: ford says forget it. you can't have him. alan mulally. ford has not changed to for mulally to stay in the ceo and president's job. he will stay there threw at least 2014. this follows a report that the board was opened to a earlier than planned departure for mulally. aft bell starts right now -"after the bell." david: let's get right to today's action. what a wild day. we have jamie cox. he is harris financial group managing partner. he says the federal reserve is at risk of losing all credibility. he will tell us why. scott shellady in the pits of the cme. scott, i

this is the big fed stock rally? you're joking, right?esterday. >> we forgot about that. take a look at the s&p 500. we started in positive territory and gradually been sinking into the west here. and most traders simply are watching the ten-year yield. that's the story and the bond market doesn't entirely believe the fed at this point. so ten years, they have been moving it to the upside and we've been slowly sinking to the down side. the vix, remember, we've got a big options exploration today, a quadrup quadruple. traders seem a bit confused down here. >> who can blame them? >> right. you can very easily have a lot of buying in put as well as call and not have the vix necessarily move that much. so it's not necessarily surprising the vix isn't up today on a down day. i do want to point out a lot of people have been saying some very simple things to me. they'ved, bob, if the economy was great, the fed would have tapered. i think it's a simple but profound truth. rate-sensitive stocks aren't doing much. some of the sectors here today, mo

like my other panelist, the story the next 24 hours is the fed, the fed, the fed.et moving sideways as larry rally peters out. we think the market is already priced in a 10 billion $taper. we handicapped the likelihood of a fed taper at 50/50. the economic recovery remains fragile and 50% that any taper is meaningless. we also think that short term interest rates we remain anchored to zero for the foreseeable future. >> we will leave it there. my observation next. stay with us. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. geothe last thing i want iswho doesnto feel like someone is giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust.

do the feds keep any part of it? there is the flipside where you worry about the feds seizing property and redistributing it. in this case obviously the iranian government they're taking money from but who knows who is next with them. >> you always worry about that. i can tell you in different circumstances for law enforcement when the fed seizes assets like yachts, boats, cars they keep them to continue the quote-unquote, war on drugs. in this case it is a little bit different. the feds will seize this property, from what i understand statements from the u.s. attorney's offce they will sell it and divide mooney among witnesses. there is victim witness protection act. that dictates how the fed is supposed to divvy up the money to people who were victims of terrorism of iran. they're saying they are going to do that i'm willing to take them at their word. melissa: it is interesting. there are seven other properties they know of this group owns and makes you wonder are there buildings owned by the syrian government, no

and what could the feds -- or would the fed be prepared to respond to that and help the economy with additional accommodation? for example, additional asset purchases. thank you. >> a factor that did concern us, as in our discussion, was some upcoming fiscal policy decisions. i would include both the possibility of a government shutdown but also the debt limit issue. these are obviously, you know, part of a very complicated set of legislative decisions, strategies, battles, et cetera, which i won't get into. but it is the case, i think, that a government shutdown and perhaps even more so a failure to raise the debt limit could have very serious consequences for the financial markets and for the economy. and the federal reserve's policy is to do whatever we can to keep the economy on course. and so if these actions led the economy to slow, then we would have to take that into account surely. this is one of the risks we are looking at as we think about policy. that being said, you know, again, our ability to offset these shocks is very limited. particularly debt limit shock. and i thin

the fed is fallible, made up of human beings. i think it's fair to criticize its performance over the last few years because it's made the same mistake again and again and there have been people within the fed and outside the fed writing things and saying things that have been too optimistic. but having said that, i don't think that when you start to assess the situation and either say there's new information or, you know what? we think we were wrong. i don't think you should stay on the course just to protect something like credibility. >> i agree with that very much. i think probably the answer to your question is it damages credibility a little bit because a lot of market people now think the fed misled us. like they misled us deliberately. it wasn't deliberate as david just said. the picture has changed and it's not evolved quite as favorably as the fed thought. remember, chairman bernanke first poorly but then much better emphasized time and time again this is conditional on the behavior of the economy. this is not a pledge

there is other stuff beside tess fed.t 8:30 eastern forecast to rise 2.1% to 950,000. building permits are expected to slip 0.1% and fedex reports results before the opening bell as does general mills, cracker barrel and manchester united. a year on from the close. we'll hear from oracle, as well. cer ] this store knows how to handle a saturday crowd. ♪ ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bi ts and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. >>> time to taper? a draw souven r down is expected today. golded slated to a six-week low. further stimulus measures look less likely. gilt yields rising while treasury yields have been coming lower. we'll take a short break. coming up next us airways and american airlines

is the fed not talking? june and september, have led to outsized market moves and i think that bernanke would agree that's not what he really wants to happen. >> steve, we'll obviously discuss is further throughout the day. for the moment thank you, steve liesman with the latest on the fed. let's get to jpmorgan and its fallout from the london whiale. the bank is to pay almost $1 billion in fines. they're also extracting a rare admission of wrong doing from ceo jamie dimon. kayla tausche has more on that back at hq. >> good morning, simon. it's just one chapter in the london whale trading factor. the firm said it would pay the $920 million to four regulators that have been investigating the situation for over a year, $200 million to the federal reserve, $200 million to the s.e.c. the s.e.c. settlement came with the rare admission of guilt acknowledging to the agency that its giant months-long derivative trade violated federal securities law. jamie dimon said in part, quote, we've accepted responsibility and

dennis: it is fed day.et participants away the fed's decision on capering. the question is by how much? $5 billion, $15 billion, possibly more. economic and all standing by with a cake and how to play with stocks targeting ben bernanke and company's decision. dennis: get ready to push the update button. apple moments from rolling out its latest operating system, i have never seen so much focus on this software. what you need to know on that upgrade and how your company's wi-fi system may get jammed. cheryl: the only person that is going to wait for that upgrade. walgreen's joining other large u.s. companies shifting employees to government health care exchanges. there are investment plays behind the news. we will show and to you. dennis: we've begun, take a cappuccino with apologies to the godfather. how starbucks's dan bent will play on the stock price. cheryl: top of the hour, stocks every 15 minutes, nicole petallides on the floor of the stock exchange. investors on fed watch but it is more about apple,

the less time the fed belted out a lot the fed has taken the balance sheet from eight hundred billion to over three point two trillion in the last four years we haven't had a crisis since two thousand and nine there's no shortage of liquidity if they've taken their balance sheet to over three trillion without a liquidity crisis what are you going to do if we have a liquidity crisis which i expect they can't take it to six trillion or nine trillion they're at the limit the fed is technically insolvent on a mark to market basis they don't have the capacity so the only clean balance sheet left in the world is the i.m.f. so when this crisis happens the only way going to be able to reliquefy the world is by printing us to us wait a minute he said there was no a liquidity crisis back five years there there was a liquidity crisis yes they met their liquid through i said by expanding their balance sheet and what you're saying is that unlike that period this next wave will overwhelm any capacity for the fed to expand to what would need to be thirty trillion cooperates actually in bad debt so i

fed says we're going to taper, rates rise, fed comes through and says, you know what, rates are up too much. i'm not going to taper. and so, this can go on forever. and if the rise in rates right now is too much, then, you know, and somebody earlier said, well, the fed is telling the market, if you get down to 2.5%, i'll taper. the bond market has no incentive. that's not an incentive for the bond market to say, i'll bring it down so the bond will taper. i like that notion of being at sea, if you can layer in that notion of a hamster on a treadmill, too. >> tony, what do you want to be buying here? you've talked a lot about technology because that's where the growth is. now we see a market soaring to new heights, do you get a sense this is sustainable? i mean, valuations getting up there with 17 times. what's your take? >> maria, i still think valuations are on their way. if we're republic reply indicating those valuation expansions i mentioned before, the four sectors that outperform each time are financials, information -- not information. financials, industrials, health care. in thi