federal reserve despite saying it will spend something like a trillion dollars in additional qe this year or next year is lowering its economic forecast. if you look at the outlook for 2012 through 2015, it actually lowered the outlook from its september forecast. take a look here. tenth off of 2012. tenth off of 13. 15 bases points out of 2014 and 2015. look at what the federal reserve did with unemployment rate. it did lower that as well. remember that a key reason why the federal reserve announced today, it'll be doing another $45 billion in quantitative easing bringing the total to $85 billion a month. can you see a quarter point from it in 2012. 20 in 2013. and on ward towards 2015, but just look at that. 80 basis points off the unemployment according to the fed's forecast. that suggests you get very little bang for your qe buck there, brian. i think that is something worjs discussing. they will spend, if they do, $85 billion a month. trillion this year in quantitative easing. over the course of the next couple of years, bringing the unemployment down by 80 bases points in total. >> i d

federal reserve despite saying it will spend something like a trillion dollars in additional qe this year or next year is lowering its economic forecast. if you look at the outlook for 2012 through 2015, it actually lowered the outlook from its september forecast. take a look here. tenth off of 2012. tenth off of 13. 15 bases points out of 2014 and 2015. look at what the federal reserve did with unemployment rate.

now this is not the day to talk about fiscal cliff or qe 3 or anything like a that at all.addy are you sure if you let go ♪ i'm gonna be all right ♪ he said trust yourself my boy ♪ keep your faith and know that dreams can still come true ♪ and know i'm here to catch your fall ♪ because that's what daddy's do ♪ that's what daddy's do ♪ they shield you from the rain ♪ shelter in the storm ♪ there to ease your pain ♪ wherever you may roam ♪ what you are going through ♪ know i'm by your side ♪ because that's what daddy's do ♪ that, na, na, na, na ♪ na, na, na, na, na ♪ na, na, na, na ♪ na, na, na, na ♪ na, na, na, na, na ♪ now that i'm a grown man ♪ with my own family ♪ pictures of my daddy on the wall ♪ look like faded memories ♪ i can still see him standing there ♪ the day he he read the doctor's news ♪ though i tried to hide his pain ♪ he smiled and said, son, that's what daddy's do ♪ ♪ that's what daddy's do ♪ they shield you from the rain ♪ shelter in the storm ♪ there to ease your pain ♪ wherever you may roam ♪ what you're going through ♪ know i'm by your side ♪ because t

now this is not the day to talk about fiscal cliff or qe 3 or anything like a that at all. and over and over again. and then, five minutes later, i wouldn't know what i just read. it wasn't sticking with me. it wasn't sinking in. and that, to me, was really frustrating. as i got older, i was still having that issue. and that's when i knew i needed to talk to the doctor. announcer: if you were diagnosed with adhd as a kid, you might still have it. find out more. take a quiz at ownyouradhd.com to help recognize the symptoms, like inattention, impulsivity, hyperactivity, then talk with your doctor. i take responsibility for my adhd. it's your adhd. own it. >> we are back now with billie ray cyrus a song with close to his heart about being a dad. gather the kids around and listen to that's what daddies do. take it away brc. you got it. senate ♪ ♪ i was just a young boy ♪ the day i learned to ride my bike ♪ ♪ i asked daddy are you sure if you let go ♪ i'm gonna be all right ♪ he said trust yourself my boy ♪ keep your faith and know that dreams can still come true ♪ and know i'm

now this is not the day to talk about fiscal cliff or qe 3 or anything like a that at all.at rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? >> we are back now with billie ray cyrus a song with close to his heart about being a dad. gather the kids around and listen to that's what daddies do. take it away brc. you got it. senate ♪ ♪ i was just a young boy ♪ the day i learned to ride my bike ♪ ♪ i asked daddy are you sure if you let go ♪ i'm gonna be all right ♪ he said trust yourself my boy ♪ keep your faith and know that dreams can still come true ♪ and know i'm here to catch your fall ♪ because that's what daddy's do ♪ that's what daddy's do ♪ they shield you from the rain ♪ shelter in the storm ♪ there to ease your pain ♪ wherever you may roam ♪ what you are going through ♪ know i'm by your side ♪ because that's what daddy's do ♪ that, na, na, na, na ♪ na, na, na, na, na ♪ na, na, na, na ♪ na, na, na, na ♪ na, na, na, na, na ♪ no

by the way, a little news is that on september 13th was the last announcement by the fed about qe3 or qeumber they're on. the market is no longer listening. it is down pretty decent from there. what happens if the market stops listening to the fed. i'm not so sure we're there but the market hasn't been too good sense. tracy: because there is no place to go. have to ask you about the fiscal cliff, you're pretty much assuming we're getting higher taxes, aren't you? is any deal at this point better than no deal? >> any deal is a bad deal. tracy: yeah. >> tracy, we talked about this all the time on weekends and stuff, nothing is going to change. this is a big con game, a big shell game. taxes are going to go up and i have news for you, spending is going to go up. this talk of a trillion here and a trillion there of spending coming down, that is off of 10 trillion already accounted for in the next decade. so we're going to be in the 20s as far as deficits going forward. i think they're taunting markets. i'm hoping we don't wake up one day and markets look at what is going on here and fire rig

have we seen qe or not? is that the end of qe? >> i think projecting out of three months of blackout, i think projecting forward talking about what i think is going to happen rather than what i want to happen, i think they're not going to do much more. they may at the margin did a little bit more qe if there's bad news. but they won't be taking the steps they need to do which is to buy nongovernment bond assets, which would be to use their new powers to put competition in the banking system which would be to try to coordinate with the government getting a business bank launch, securitization of debt. they won't do any of that. i think -- it's not so much just what's happening on the fiscal side. a lot of my former colleagues have talked themselves into this policy defeatism that qe doesn't work or it hasn't worked or that slow growth has to be structural. i think that's all wrong, but i think that's where they've talked themselves into. >> does it change when mr. carney takes over? is he the right man >> on paper he's a central ba

could also call it qe four or even qe six.tever you call it the fed is set to increase the balance by a trillion dollars. 6.5% and a 2.5% inflation right. bernanke was not shy about explaining his reasons. >> the conditions prevailing in the job market represent an enormous waste of human and economic potential. return to broad-based prosperity will require state improvement in the job market, which in return requires stronger economic growth. >> now just want to make sure you understand what's going on here. there were really two policies out here, and two rules. you talk about that a little bit with dino in the last hour. okay, so qe, the purchase of assets, will continue if, quote, the outlook for the labor market does not improve substantially. keeping the fed funds rate at zero will be appropriate at least as long as the unemployment rate remains above 6.15% at inflation. notice it is not the same numbers, the same policy rules for qe. we don't know what those numbers are leading neil to talk yesterday in his criticism, h

qe. we asked our correspondents whether or not mr qe would bring down the unemployment rate.ss what they said, no. 59% said, more qe, which the fed is expected to announce tomorrow, will not bring down the unemployment rate. which is really interesting, what will help bring down mortgage rates, like carl said, yes, what would help lower bond yield, yes, will it cause inflation, no. a little bit closer right there. so just take this in for a second here. it will bring down mortgage rates, it will bring down treasury rates, but it won't lower the unemployment rate. that's a clear sign that what wall street thinks right now is the problem with unemployment is not linked to interest rates. that's not what bernanke thinks, but that's what a majority on wall street believe. take a look here. we're going to show you in a little bit, the gdp outlook is lackluster. 2013 keeps coming down, now below 2%. what's the forecast for the market? not much changed from the end of this year. that's about 4% up for next year, no big boom expected in the stock market next year. let's go on and tak

the latest was what was come to known as qe-3 or the third installment of quantitative easing. printing more money to get into the system, a lot more money, rather than just swapping existing money for bonds with major banks. today, the fed says it will pump even more money into the economy in 2013. >> the committee took several steps. first, it decided to continue with purchases of agency mortgage-backed securities initiated at the september meeting at a pace of $40 billion per month. second, the committee decided to purchase longer term treasury securities initially at a pace of $45 billion per month after the current program is completed at the end of the year. >> do you understand what he said? what effect does the fed dropping all sorts of money in the economy actually do? the most noticeable effect for most people will be felt if you're buying a house or refinancing one. mortgage rates will continue to be at historically low levels. generally speaking, the fed's actions mean that it is easier and cheaper to borrow money. the aim is that money will be bore rorowed for larg

not least because the fed is meeting and may substantially weaken the dollar on its announcement on qe ort as sensitive on the greenback to that at the moment? >> i think that's priced in. what's not priced in is what happens after the ex-dividend date for stocks. i think they rallied back from their post-election blues because so many companies have issued new dividends. the fact that you were talking about apple and then not payi i a dividend and that's why they are selling it. several companies have issued special dividends. disney and costco especially costco with that $7 dividend is really important. >> thank you very much for that. andy bush from bmo capital markets. be sure to catch money in motion currency trading on fridays 5:30 eastern and if you want more education about currencies, go to currency class@money motion.cnbc.com. >>> a bigger than expected slide in the past week down by 2.4 million barrels. crude supplies fell by 2.4 million barrels. 7.9 million barrels was the rise in gasoline inventories. then we are also looking at fuel supplies that were up by 3 million barrels

want to turn it over to him and ask him what he has on the qé captain, can you tell us what you have? >> yeah, i don't have any new information oro -- why don't we wait for everybody and do it all at once. >> reporter: okay, we are on the air now. can you just give us the latest information that you stepped out to give? >> the latest information is that there is no new information other than what i previously stated, officer-involved shooting, officers are okay, there is a suspect deceased and we are still working through the investigation. >> reporter: captain, thank you. at this time, police are not saying why they shot the man or whether he was armed what he did to make officers feel like they were being threatened. they got the call 3:15 this morning, 911 call, they could hear screamingç=2÷ in the background. they went to an apartment complex on creek side drive. at 3:19 shots were fired. the man did die. the officers were all okay, no officers were injured this is the briefing they gave us a few moments ago. you heard the captain is here again but says he doesn't have new information. police officers are still on the scene

qe three. a provisioof additional liquidity. tracy: will it be necessary? the law of diminhing retns. ort getting the bang for our buck like we used to get. tracy: clearly not. clearly the stock market is the gauge of the success of quantitative easing. more than the fit couplef rounds and hap in the happen ton the big boost housing is because ices are starting to increase not as much on the mortgage side. we have record low mortgage rates with prices going up and that is e double incentive for homebuyers. you could argue that is more at play than what the fed has done. the fed will do somethings ultimately if we look back and said that was the elixir for the -@economy, less sure about that. tracy: that to get people t on the weekend looking at homes again. >> the chairman of our firm, that been in view he has expressed fairly publicll certainly ng-term unintended consequences keeping interest tes down so w. th have promised they will keep rates low until 2015, what is the rus muscle to this thread with the ght financial institution, why go out if my competitors are not doing it. there i

qe? will we see any more next year or not? >> well, it will depend, i think, on how things develop. on our baseline forecast, the answer to that would be no because we are looking for recovery coming through really reasonably significantly from the first quarter of next year with .4% quarter on quarter. >> julian, thanks for that. always good to see you. julian kelly joining us from barclays. which country is more corrupt and which is least? you can go to our website today to get the interesting numbers. denmark, finland and new zealand tied for being the perception of the cleanest countries. but who ranked highest as the percentage of the most corrupt country? get it all on cnbc.com. >>> foreigners are still flocking to the london property market. find out why more chinese and russian investors are sinking more money into the capital. we'll get into that. >>> these are the headlines from around the globe. china's mainland market surge nearly 3%. more austerity. britain faces further spending cuts. chancellor george osborne will be releasing his statement amidth lower growth prospec

leadership and the embracing of american style qe is a big reason why we went from starting 2012 very underweight europe to overright europe. don't fight the feds or the trend. even on a day like today, it's fascinating in a down day that europe is beating the u.s. beware of the funded extremes, investors across the glop positioned, most underwait places in asia. makes us bullish. david: one sector not fighting the fed are the financial sectors benefiting nicely from the money printing. they got a lot of heat, of course, from regulations en, ect., but so well capitalized the the momentment do you think because they are capitalized and set to grow, that they are a buy at these prices? >> well, excise i agree with. the data, many, many financial firms back to where they were before the financial crisis, i don't know about the earnings part. the earnings outlook for a lot of major firms still is not really great. financials wind up being the best performing sector of the year so far, but not brave enough yet. >> chris, tas nateed with the trend -- fascinated with the trend, but what sectors, and europe is controversial, but which parts? there's south

sees a 30% rally in japanese equities in 2013, because of this printing press, or whatever you want to call it in japan, qeows. either way, the ceo saying, i see good times for the stock market in japan. and look at the nomura holdings. that stock up 60% over the last four months. so people have already been buying into japanese equities. another 6.5% gain for nmr today. >> could i put a big warning across this. >> sure. >> that's in yen terms. the aim here is to debase the yen currency. if you're an american investor, by all means, you might get 30% return on the nikkei next year. but you have to subtract the currency effect on that. that could be huge if the bank of japan is more successful debating its currency than the fed's current efforts. >> you could be like carl bass and change your mortgage into a yen-based mortgage. >> ooh! oh, no, no, no. don't do that. hi a friend who did that into euros. no, no, no. >> that's a different issue. >> how about the tazmanian dollar? >> you got me there. >> "money in motion" happening right now. >> nice, brian. thank you. brian sullivan back at hq. case-shiller fo

or where the fed thinks the long run unemployment rate. is when do you do that? and finally, the thing that i would come back with t.to, whate gauges for qe. there are two policies, tyler, and two rules. qe policy is not the -- >> is bond buying. >> it is different from the rate policy, which is tied to 6.5% unemployment. what we need to do, what your other investor guys, is sell me a derivative that takes my bond portfolio and henls my equity portfolio to those two numbers. because remember, we had a time limit mid 2015, that correspondents to the time in the bonds. i don't have a product right now that will protect me for 6.5% unemployment and 2.5% -- >> someone is on the derivative right now. >> i should do that. >> don't you have an incredible need to open your shirt like richard dahltry. >> i do not. because of what could be underneath. >> terrible moment for either of us. >> sue, back to you. >> all righty, then. breaking news from bond market. 30-year bond market off the charts and rick san telly is tracking the action at the cme. first one since the move within ricky. i'm still aclempt from the idea of steve leisman taking off his

or market dislocations. the fed has stayed too long at the party. one more comment, "monetary policy dampening the animal spirit of the business cycles and long-term effects of qe could be detrimental to economic growth and stability. we might ask questions, throw criticism at him. but right now, it feels like bernanke is losing the street. the street is upset about the fiscal cliff and not all that happy about monetary policy. >> maybe stay a little longer at the party. no matter how many billions or trillions the feds show, when is the economy going to clear the hurdle, that is that the labor market improves substantially to start that winding down process. >> i think it's going to take time. i think we have a chance of getting below 7% next year. but the problem is going to be if the economy improves, if the job market improves you could have people back in the employment force, raise unemployment. possible in the next half. if we could start rid fiscal cliff and get confidence we could have hiring, which should be in the 2 or 3,000 range, stop messing around with this 100, 150,000 a month. >> as steve said, tomorrow is a big day on christina. the fed decisi

the fed, they're going to continue to expand their qe program likely at the meeting on december 12th. depends on whether that's good or news to you. that will provide some cushion against austerity. so a mixed realization about where all of this is going. one of the reasons the markets are holding up well. the toll numbers. i want to emphasize, 70% increase in orders. do you know what that is like? that's like phenomenal. most of these companies are having great years. they're reporting 20% to 30% increases in orders. toll is the top of the heap. luxury home builder. 70% increase in orders. gross margins increased dramatically. 20% gross margins. bottom line is they're doing great. here's the problem. it's really expensive. the stock is a fortune. it's like 30 times forward earnings. that's a lot. most of the other companies competitors are in the 20s in terms of their numbers and even that's expensive. this is going to be a problem. has been for home builders for a while. let's talk about knight capital. i want to get your thoughts on this. offers appear to be heating up a little bit. there are reports that another c

or freddie. the irony of that, which is what we are trying to point out, we are trying to help the taxpayer out. at the end of the day, this is all part of qell announce the additional purchases. dennis: you think that the new move will be to double the amount of purchases they are doing every month from 40 -- >> we do think that the fed will announce that. at this point, this is kind of a market consensus. they will just be rolled into qe. -@the treasury associated with twist are about $20 billion. dennis: it is not a net increase if they are are ready doing that with the twist. more broadly, maybe the fed should not be buying all of these i think that there certainly is a sound argument to put forward in that regard. that will keep them very much in play. the one thing i think people need to realize, the fed is pushing down low rates in an environment where low rates do not necessarily matter. few people have been able to take advantage of these low rates. they are trying to buy time, between today to another point out in the future where it will matter. dennis: how soon before we hear them say, look, guys, here are a couple things we nee

qe, they're concerned about the inflationary impact. my mind, i'm thinking we need to get the economies moving again. if that means inflation were to rise for two, three, or 4%, that is a lesser order risk than deflation. >> we've joined by vishnu. you just heard talking about the feasibility of giving to a 2% inflation target. what is it going to take in your view? how likely is it? and what is it going to mean in the end? >> there will still be a challenge to achieve higher inflation, that is electricity tariffs and whatnot. core inflation is going to be pretty low. nonetheless, i think a first step, perhaps, is for the boj to signal they're going to take a lot more aggressive steps through the economy and that needs to be complemented by fiscal programs, especially structural programs that will revise the japanese economy. that is one reason why markets are reacting to what looks like a serious challenge undertake by shinzo abe. >> it's been an extraordinary rally for the last several weeks. when you look, for example, at the boj minutes, is that what you want to hear is this discussion of open ended asset purchases? or is there a different method that

gentle slope or whatever it turns out to be to negotiate and c, because we haven't found our legs in the u.s. and we clearly have some global headwinds coming in 2013. however, the thing about this qethe u.s., unlike previous ones where they could see big economic problems, let's comfort the market with a really big number, this time we're going to do it month by month. solo the annual figures look very big, they're going to halt qe as long as it looks like there's inflation. >> which means there might not be much market reaction as investors realize that. >>> find out what travelers are still flocking to the shores and how much of that money contributes to eugdp. be back in a few minutes. can i ? i heard you guys can ship ground for less than the ups store. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night. is this a trick to get my spot? [ male announcer ] break from the holiday stress. save on grou at fedex office. >>> these are the headlines from around the globe, bank stocks in europe down for a second day. some of the biggest lenders of the company have seen over a 3% loss. >>> and prime minister mario monti and s

or not it will provide more stimulus for the u.s. economy. the decision is now in. we'll go to ali joining us live. what do we know? >> the fed is extending the quantitative easing plan, qethere was a part of the plan that was supposed to end at the end. month. the fed has said starting in january when that other plan ends the operation twist they're going to invest $45 billion a month in buying bonds, longer-term bonds. the effect of that is going to be to keep longer term sfw rates low. you know that you can get a mortgage for a historically low level. the fed is going to do things to continue that for the foreseeable future. their tieing it to unemployment, to the unemployment rate saying that until the unemployment rate drops below 6.5%, they will keep investing in the economy, creating liquidity to that banks can lend money to people and people can get mortgages at low rates. what they said about the economy, suzanne, is things are generally looking good. they continue to see good economic activity, but they have seen a slowdown in fixed business investment. so that may have something to do with the fiscal cliff. there's a bit of a slowdown there. the economy is mov

question to you, if you believe that or against that context, whether the fed is intent on debase the dollar longer term and what the implication. are we basically stuck in qeery long time and 30% down on the dollar to occur the likes of bmw and daimler, what are the implications? >> a lot of great questions there a couple things i say, we think more jobs can come back, two reasons. never underestimate the importance of housing to the job market, going to get more housing starts next year, state levels way below household formation, when we get an extra 100,000 new starts we get almost a half percent drop in the unemployment ray. secondly, the energy picture is going to change. you and i have grown up in a time when energy has been -- we have been importing energy into the u.s. the u.s. is going to start being a major exporter of energy. going to take time but end adding those jobs, cheap natural gas will bring jobs back to the u.s. we are long term volek. your last question about the fed and how long it will be, when we start getting unemployment down to 6 1/2 we think could happen in two years, you will start see interest rates grow up. >> just on the sub

qe programs. what's coming next after that. there's a lot at stake here for the fed. >> let's pinpoint this. you're not saying that you think the programs have worked orjust saying he will be affected because he's carved out ground trying to help the economy, knowing that this is looming. >> i'm a global trader and i have to look at this and see how it's going to play out all over the place. i said who is, whose reputation is most online and the fed has a lot online. the economy is starting to get some gravity or get some growth going and that's a good thing. this is going to set them back and then it's going to look to see what's the response, and what is the fed, and the fed is going to be -- >> the more pressure on ben bernanke. >> absolutely. >> let's look at another area. >> can i add one more point? >> sure. >> when you look at it and larry summers was on this morning, whom i have great respect for, he had the piece from the imf study when you cut the deficit by 1%, what is the impact on the gdp. they didn't get into that this morning but if his numbers he's using 0.9 to 1.4, if you lose 2% to 3% of gdp you'll go to negative growth which will im

or will it purchase treasuries and mortgages? you can see that they're about split on this. unclear what chairman bernanke is going to announce tomorrow. now, how about how much qee pretty united on that. this is what we call distributions. the percentage of respondents answering which number. you can see pretty much the biggest priority, 35% at $85 billion. so that's $40 billion that they're doing already and then replacing twist would be $45 billion. some disagreement along the way. the plurality there is $85 billion. what does that mean for next year? a whole lot of asset purchases. here's the distribution chart again on the total purchases for next year, and they're looking for a trillion or more. in fact, if you put together the trillion or greater, it's 35% of the group looking for a trillion dollars of asset purchases. remember, the fed owns -- the fed balance sheet is $2.8 trillion. that's a big jump in the total. what about whether or not additional quantitative easing will disrupt the market. market pricing. is the fed taking too much out? big change here. back in september when we asked this, only 43% said yes. 59%, 60% are concerned now, that the fed