>> i think he's been right about qe.e most of my time on the committee. i think his vision in creating inflation targeting regime and shepherding it through has proven right. on the financial regulatory side, he has a series of misjudgments. i don't think they were -- they were not criminal by any means, but they were -- the decision to kick supervision out of the bank, it's not a great record. consistent with that of greenspan and the other leaders of that period. they were all convinced and reinforced each other's beliefs the financial system was largely sf regul self regulated and you could play tough hardball with it without really intervening, which were false assumptions. >> so in terms of monetary policy, he got gets a tick, but terms of regulation, you think he failed? >> failed is a little strong. he certainly didn't do great. but again, i want to emphasize he gets credit for the monetary policy side, but he was part of a broader movement it that he led but it wasn't just him that pushled t pushed the agenda. >>

nail in the coffin of any more qe from the bank of england for now.s a week of stronger pmis in both construction and manufacturing. but of course, the debates now turning to what happens with the qe program in the united states? are we getting our knickers in a twist about tapering when it starts or when it doesn't? we'll get the views of howard marks, chairman of oaktree capital. he'll be joining us for an exclusive interview throughout the next half hour on "worldwide exchange." find out why the man who runs nearly $18 billion is bullish on european corporate debt. the next hour of the program continues right after this. 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 living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ a

>> well, we learned that the fed is going to taper qe at the end of the year, end qe by this time next year and start raising interest rates by the early part of 2015. of course, that depends on the economy and that the economy sticks to the script that the fed believes it will and, you know, that's most likely economic sen scenario and interest rate path. >> mark, what do you think of the timetable? do you think the economy is ready to have the training wheels come off? >> yeah, i do. you know, i think that by late this year, the fiscal head winds, the tax increases and spending cuts will begin to fade that will let the better private economy shine through that is a long narrative in story but i think it is the best and most likely story and yes, at that point i think it makes sense to start tapering qe ending and starting to raise interest rates. >> if the economy is getting better which allows the tapering of the qe, why did the markets react so negatively? >> yeah, good question. you know, if you read sort of the fine print in the fomc statement, it was pretty hawkish. they dowed b

should the fed stop qe? should the fed stop buying bond which is is really what bernanke's signal was a month ago? >> the fed should. what does it do? >> they should stop buying bonds. >> what if that drives up long-term interest rates to 3.5%, 4%, 4.5%. >> the fed should look at interest rates and they've made that transition, and they should let the market set those rates and the key is if you have the king dollar and the stable dollar where people started to trust it again as they did in periods in the past and that means a more vibrant economy and you don't have to worry about where rates will go. markets will set it. >> you are not worried, though if they quit buying bondings. >> make it very easy for companies to get cheap, cheap financing and we're talking about investing in gold and why in the world would you buy gold unless you're a jeweler? stable environment means you don't have to worry about gold. >> they've got to get out and we'll get out of here for a second and the fed's got to get out. i wa

he is not talking about unwinding qe 2 or qe 1. and i think that the important point is that it's going to go all the way out to 2015 before we see a reduction in interest rates. or an increase in interest rates. >> right, right. you agree, gary? >> that's the pivotal point. again, if you're a major asset allocator trying to make a decision on quantitative models, it's about actual rise in interest rates, when you start to factor that into a dividend discount model. that's not being pushed out definitively until 2015. >> if you look at -- if you look at today's statement and compare it -- if you look at today's statement and compare it to may, there is fewer changes in the words today from the last day than there has been for many, many meetings. >> right. but a little more hawkish. >> -- but we have a long way to go. >> mark, i have to push back. >> go ahead, steve. >> i have to push back on that. the idea of a central bank saying the risks have diminished is a classic signal that policy is changing. it's the first time they've ex

i think if the fed quits qe and rates will continue to rise. i don't have a crystal ball any better than anybody else, but i have a hard time believing this whole process has been discounted either by bonds or stocks, and i will say it once again, if in the next year the fed does what bernanke said it's going to do and it ends qe -- it ends bond buying, andy bush, then i think the ten-year rate goes from 3.5% to 4%, what's your take? >> i think that's a good level of a normalized interest rate structure for the united states, assuming we can get growth at 3.5%, they created this situation when they came up with qe part 3 and said it would occur to infinite and i think that's where the markets got in there. so what i'm worried about now is the overleveraging that has occurred over the last year and the pulling out from there. we saw that in emerging markets and we saw it in emerging market bonds and you saw brazil at the top of the show and that's just one xafrmel where i think they went too far out on the risk curve which was encouraged by the

>> they did that with qe-1 and qe-2. what they're worried about is, they did that and the economy slowed down again and they had to restart the whole thing. so, i think the strategy that they laid out is, what they're effectively saying is that they're uncertain. they don't know if this thing, if the economy is going to hold up. they don't want to face the embarrassment they faced a couple more times now of stopping something and having to restart it. so, they are keeping their options open. >> john, real quick. i know you are pressed on time. behind you, is that a present from that woman in scarsdale, that plant? look over your right shoulder. >> you know what, i can't tell you. >> is that real? >> is it real? >> i'm going to have to pull some of the books off the shelf and see what they're all about. >> just don't smoke it. >> john, thank you. >> okay, all right. thanks, everyone. >> reporter from "the wall street journal." known in some circumstance. s as the fed whisper per. >> got that one in. >> people listen very

i wasn't necessarily with him at qe in the beginning, but as i said, i think that qe has been reresponsible the equity and credit market. has a real impact on main street. >> that has a steady influence. >> a steady influence. the only kwi question i have back to your point steve, he didn't want to make it about him, he wanted to make it about the stux. one thing we have observed is there are more voice coming from the fed than we are seeing before. that creates uncertainty, right now, one has to question or at least i question whether or not they need to reign in the number of voices. i wouldn't call it a caukaphony. you hear different things. >> i don't know they need to speak with a different voice. i think it's a strength. i think they need to agree on policy rules and have a better discussion about why they would move, go up or down with qe. remember, substantial improvement is a very nebulous term. >> i remember the markets took off when he came out with a metric you could understand. so that's what they need to do as opposed to the answer, we're going to physical it out. >> rick, if

bear in mind we've got qe-3. until this crisis we never had qe-1. qe was unknown.'s not surprising. everything uncertainty, unknown, new rules. even the fed admits it's experimental. tapering. these are all different concepts. so it is not surprising in this environment that when something like bernanke speaking or when you have gold moving that investors are just moving with an element of mentality and an element of uncertainty. new rules of the road, high frequency trading. everything is faster, everything is more detailed, everything is more pronounced. it's as if the markets are in glorious techanicolor. >> let's talk about the technicolor of gold. gold has crashed. regular investors have been saying, oh, look what the fed is doing. it's manipulating everything. i'm going to buy gold. regular investors have been killed this quarter in gold. >> a dumb, stupid metal the love of which i have never understood except as a marriage band or as a piece of delightful jewelry. >> mine is platinum. >> exactly. that's my point. people say having a bit of gold in your portf

it's not so much the tapering of qe that's the issue.it, they have to say it, and everybody talks about it, and, therefore, you get a series of contractions all the time. the market is coming up more and more negative talk. >> i don't disagree, simon. i actually agree with you. i think in more clinical terms, what the fed was trying to do was to use forward guidance as policy to proteject forward tha the policy was not going to change until economic targets were hit. we didn't get through the policy through the most intelligent or academic way. he had to make a political compromise and that compromise was he could not put numbers around when the fed would change. he could only get away with substantial improvement, and, again, it's that lack of transparency that i believe leads to this volatility right now. >> okay. i hear you, steve. it's a busy day for you. thank you very much for the moment. steve liesman live from the federal reserve in washington. let's bring in jeff, chief market strategist with lpl financial. jim is also with us,

99. >> yes, correct. >> we're at qe-2, qe-3. we are looking at at tapering program, though, slowly but surely really coming into force now. why assume that we have to continue? >> well, i think that, actually, the economy will weaken and not strengthen globally, because if you look at where did the growth come in the last ten years or since the recovery occurred in june 2009, we are four years into an economic recovery already, it came almost 80% from emerging economies. at the present time, the emerging economies, in my view, are not growing. they're not in a deep recession but just stopped growing, and corporate profits will come under pressure, and that will have an impact on the western european companies and the u.s. multinationals. >> so, marc, where do you see value in the market at the moment? if you think that we're oversold for the time being, i mean, what should we be betting on? i spoke to someone yesterday who said he thinks that cash at the moment is a pretty good bet. but at the same time, you look at the japanese

and i think the point earlier make you about qe infinity now becoming qe six months.vestor, you have to realize interest rates will start rising sometime sooner than qe infinity and that's why i think that you look at the five, seven and ten year treasury, total returns already negative this year. those higher future interest rates have already got to be priced in to the marketplace. so qe infinity becomes qe six months and that has a huge impact on pricing. >> a lot of people talk about how you should get out of stocks that act like bonds and dividends are where people are focusing. >> yes, i think any stocks that we're seeing as bond alternatives which really stock shoes not be because to pick up an extra 1% or 2% in your yield at the risk of an aez eeasy los principal is not worth it. but of course we've been pushed out on that risk by the federal reserve. so you're looking -- i'm looking for companies that can grow in dividend. but really it's a total return that i'm looking for. i think it means they have good cash flow and are confident, but not companies simply

it was still about the big black hole, qe 1, qe 2, qe 3, we have the risk of a black hole, that riskessening. therefore the pe run that has occurred as people have recognized the big black hole isn't going to happen is in its waning days. we need to move the e. >> i agree. the role was to wrestle volatility to the ground. that actually allowed you to have all these riskier assets to do better. maybe the trick is, just at the moment we thought a risk was gone, i don't think it's the big black hole. >> i like that analogy, central bank mma. bernanke vs. bolard no holds barred cable match, who wins? . >> i actually think the interesting thing about the bullard. >> it hasn't been physically. cust of fists. >> fist of cuff, actually, right? what language do you speak, australian? >> the interesting thing about two dissent, one hawk, one dog, remember we were talking about the hindenberg omen, i think that's interesting sample let's go back to mark and get the play book for this week. give us your best trade, mark. it doesn't have to be the dollar the yen, can you go out of the box. for ex

the fed's going to do qe for another year.n keep interest rates at zero for another six months until the end of next year. slowly exit. that's a recipe for long term interest that's going higher but very, very slowly in a way the market can digest. >> in a way we've seen in the past. there are so many almost ethical implications of that. i just want to ask you as well when we're talking about how to play this move, what does it mean for gold? you were saying back in '09 you hated it. wanted nothing to do with it. it was going to zero. it was worthless. obviously it almost went parabolic. >> i just wrote a piece this week saying gold prices are heading lower for six reasons. first one, if you're not going to have another global financial meltdown, you don't want to go into gold. secondly, in spite of qes inflation is falling rather than going up. economy is weak. growth is anemic. three, real assets are negative. they can go only higher rather than lower. rise in gold was driven by negative and falls real interest rates. from n

maybe it's not qe. maybe he leaves it to the next chairman, but i don't think that he can leave with say a .8 pce core and say the job is well done and we didn't turn into japan, you know, when it actually could be a few quarters away should that trend continue. there's reason to think that it may not. >> merriman, today 120 years ago the stock market crashed that set off the panic of 1893. we saw banks fail, railroads fail. >> that was 120 years ago today? >> it was. things look a little better today thankfully, however, the gold move has people spooked, the rise in rates has people spooked. everybody -- you know who they are. there are a subgroup of people waiting for the shoe to drop in a big way. do you see the risk of a big black swaun type event, sort of a big unexpected thing that could bring down the jenga game? >> i don't think so. the one that we worry about the most is some form of geopolitical move in the middle east. that's the one we worry about and lose some sleep over. beyond that it's h

bad economic news, bad for the market, they will do more qe and now, we have bad news might be bad for markets because they told you that this qe is diminishing. >> what do you think the kpe looks like right now? what is the state of things? >> i'm a bit, this is one of the reasons i was surprised by the timing. i'm a bit less optimistic than the fed forecast. and closer to the market consensus, but i am now. sort of in the high 2s, rather than in the low 3s. that is not a world -- >> economic growth? >> yes, something in the 2s for the balance of this year and for 2014, if you hold that view, the fed has a more optimist irk view, ben bernanke, remember, took great pains to say, we are going to be flexible, we may go faster or slower. but i don't think -- that is a nuance that markets do not like to hear. >> let me ask you what happens in the bond market, wow, what outflows, right? in the month of june, we had $40 million come out of bond fund. this is the great rotation. money coming out of bonds and going into stocks. do you think that will happen with the ten years creeping up above

the tools within those programs to actually live in a world without qe?hat's something that most investors don't understand. perhaps their brokerage firms don't have the computer programs to deal with this newfound phenomenon. >> i would take issue with that metaphor. strictly from what i'm told, marijuana makes people more mellow. again, what i'm told. qe, by contrast, has made people sort of hopped up because it's put all this easy money in there and let people take a lot of risks. the issue -- part of it is, yes, having to adjust your portfolios to account for this change. part of it is this mismatch between the way the government communicates. the obama administration is very good with social media. when you look at the supreme court, the federal reserve, they're still back in the '80s. we'll put out this information when we want to. maybe we'll have a press conference. not understanding that the world at large processes this information very quickly. almost instantaneously and almost on auto pilot with all these high-frequency traders. what bernanke

qe isn't the issue here. i think we'll be switching potentially with this number tomorrow with liquidity driven, in other words, fed-induced carry forward for the market to actually focusing on the economy. if it's that bad. if it's 90,000, under 100,000, folks, i think that's extremely negative. i think anything above 140,000 is great. so i'm not as worried about whether or not people want to talk about tapering and so forth because i don't believe that any evidence out there is going to suggest that the fed would do that in the near term. but if the economy itself is just breaking down to the point where we're only able to create 80,000 or 100,000 jobs, i think that is so negative that people will, indeed, dump with both hands. >> well, i thought that all along that qe really isn't working. when we get these negative numbers, the market really doesn't sell off. >> we haven't gotten that many negative numbers. >> manufacturing numbers, they've been pretty bad. >> i meant as far as -- >> as far as jobs, right

>> we have a qe conundrum.e largest spiking currency since lehman on a percentage basis. if you think about the banks around the world, they're long a lot of currency risk in a lot of bonds. it sets up a strange dynamic. lastly, the last time we had this type of really sharp currency in bond price volatility was right before long term capital. it sets up those dynamics. >> you mentioned lehman brothers because if we look at the emerging markets that saw the biggest decline also bond funds as well. so when you talk to clients, what do you tell them about what is going on about this ticking time bomb and how you trade around that? >> this isn't a joke but you think about the movie franken stein. there's a scene in the movie where he gets up and attacks the doctor. the side effects of qe manifests themselves around the world. those side effects, the market is starting to play games with. that's what i'm telling clients, with the emerging markets dead qe is forced capital into weak places in the world. and it's rea

this is what has to happen or more or less happen if the fed will end qe and maybe raise rates.25 growth. where we were yesterday? 1.75. that may be a little high. remember the 3.25% number. let's go to the next chart and look at the inflation projections, okay? so what we're going to do is we're going to add the one-seven, the inflation number, to the 3.25, get top-line nominal gdp growth around 9%, from what was 3.5%, or maybe own more than 5%. there's an important thing here, maria, which is top-line growth in corporate america has been growing very slowly, if at all. if you're in an environment of 5%, 6% of nominal growth, that's a good proxy for top-line growth. as lean as companies are, if the forecast ends up being true, companies could be trading -- investors will be trading higher top-line growth in corpses for less qe. bill, maria, i don't know what choice you have, i take the top-line over the qe any day. >> any day. and we saw the struggle with top line growth from oracle. >> yes. >> a real global company in there. >> yeah. >> doing exactly what you're saying. thank

why would they realize the jig is up with qe? in my opinion would be kind of the demographic time bomb. here you have them trying to change pension rules where, of course, they can purchase more equities as many central banks are trying to do in private equity and government equity, but they're also trying to put less in their bond market in the jgb market, which is a hue m market. i think when you look at how too big to fail banks have had this cozy relationship with some of the fast money and hedge funds, everything is japan. if their interest rates start to roll over, i don't care what size position the fed has, it's going to send ripples. and i just think their game is smaller in current terms but longer over decades in terms of experiment, i think their test tube is going to crack first. >> their test tube cracked. so if it keeps getting worse in japan, you figure there's no way we sit over here and it doesn't get exported to us? >> listen, there's no way the world economy could be much better than it is with what europe's g

a new report by global central bank watchdog group says the markets are under a qe spell with investors ignoring bad economic news. volatility and potential lawsuits. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. all right. let's bring you back to where we are with eurozone pmis. good morning to you. first "worldwide exchange" of the week. eurozone pmi is 48.3, better than expected for the month of may and april. there are 46.7. 46.8 is what we were expecting. we saw better numbers from spain, italy, germany getting near stabilization, as well, as steve was saying on "squawk box." 1.3027. so, yeah, but we are still down heavy, 22 months of contraction, of course, italy. and there's a difference between having a weak er contraction or slightly less contraction that is than expansion, of course. bad news, as well, from china's factory floors. hsbc's pmi reading down to 49.2. it compares with 49.6. it marks the first contraction in seven months. frederick neuman says there's good reason to be concerned. >> we are getting increasingly

, stopping qe is printing money.right. >> maybe in 2015 raising the short-term interest rates. you know, i believe he did that, you know, you know he says that in pretty explicit way. that blew me away. now why is that? did you notice on monday or tuesday, president obama was on charlie rose, basically throws him under the bus. everybody knows the guy, wasn't going to be here next year but the way he unveiled it was kind of like a slap in the face. bernanke obviously almost, you know, elected obama because if it wasn't for monetary policy, fiscal policy wasn't working. adam: if we were to get mini-me, janet yellen, essentially mr. bernanke in female form -- >> i would say, mr. bernanke on steroid in female form. adam: good for wall street but even if perhaps she is completing the president as tracy says, potentially good for the president because she would continue free money for the economy? >> not, this is, we're getting in dangerous territory here. if you keep printing money there is pointtwhere you create massive

bad economic news, good for the market, because it'll do more qe. the last thing changed this last week, and what happened now is bad news might be bad for markets because they told you that this qe that the efficacy is diminishing. >> what do you think the economy looks like right now, alan? what's the state of things? >> yeah, i'm a bit -- this is one of the reasons i was surprised by the timing. i'm a bit optimistic than the fed forecast. closer, actually, to the market consensus, which is also a surprise to me, if i am. but i am now sort of in the high 2s rather than in the low 3s. now, that's not -- >> 2% growth, economic growth. >> yeah, something in the 2s, yeah, for the balance of this year and for 2014. now, if you hold that view -- the fed has a more optimistic view, and that's a fundamental linchpin off this calendar. ben bernanke, remember, took great pains to say, well, we're going to be flexible, we might go faster, we might go slower, but i don't -- that's a nuance that markets don't like to hear. >> let me ask you about what happens

keep us guessing in som republics because wt they are worried about is that when they stop doing the qe, when they stop purchasing the securities and maybe start to sell them down the road, they are worried about a runup in rates, and what that fear is that as soon as they start to dial back the qe and diaback securities, all of us go out there and shot the bond market. their trick is to say, well, we can bow the qe down, but bow it back up again if we need to so that way we don't etrapolate. i think i can see their thinking, but it confuses people. lou: confusing people. th fed has to be smart ore than at least in appearances than it's been. there's no confidence. in he consion, there's no confidence in what in the world they are doing. are there capacity, irrespective of what that might be, to exete it? >> on their behalf, you could say they are dealing with somethingthat's complicated. having said that, they could still doa better job of couning, and, yo know, it's a situation where you got fferent members with feedom of speech, say anything they nt. they need to work hrder on gettin

from the federal reserve which is that for the next few months and few is probably until september, qe stays at 85 billion a month. in the fourth quarter qe inevitably will be reduced and that, obviously, very confident in making that statement particularly given the recent strong data we've had from the u.s. economy and yesterday we had a raft of good numbers whether housing sector, consumer confidence or durable goods. those numbers will continue. bond market for at least the next one important,ly three months stabilize around current levels. we're oversold. investors moved into cash. there's been a panic selloff. we now have a short term three months period of stability. >> bob, we'll talk more about strategy here as i said throughout the program. i just want to get you some breaking news. we're just learning mark rich the founder of the commodities group glencore has passed away according to swiss radio one. he was 78 and passed away in switzerland. we'll get you more on that as the news emerges but just to bring you that update again according to swiss radio one. the founder of gl

they've been doing for quite some time now, qe 1, qe 2, qe 3.the money in the mattress. you can't keep it on lufthansa, you saw that. and, obviously, a recalibration when bernanke spoke may 22nd. but i think that's starting to pass. the fed speakers we've had out right now have been saying that qe is not going to end. it didn't end yesterday and it won't end tomorrow. >> do you agree with that, david, there's no alternative, i think t.i.n.a.? no alternative to stocks right now? >> i said about a week ago, there's nowhere to put your money in stocks when comparing with bonds and cash. equities are the place to be, absolutely. when you're looking at the numbers today, no one should be looking at the revised 2013 q1 gdp number. they should be looking at it when they're predicting q1 2014. the market is predicting we'll be seeing better numbers going forward. you know, again, my opinion is, i think stocks are the place to be. i've said it before -- >> but wait. which stocks? do we have to get more specific here? the stocks that are going to survive

they had to bring back qe each time.ve it enough time towards the end of this year they begin to slowly test pulling back quantitative easing maybe towards the end. fourth quarter, maybe early next year once the economy has gotten on a better footing and see better job growth numbers. dennis: we added 175,000 jobs in may. the participate race, 420,000 new people getting back into the workforce searching for work. good thing or bad thing? >> dennis, as you know, as we start to see job growth pick back up again, it is good thing to see unemployment rate tick higher because it means previously disgorged workers are coming back and looking for jobs again -- discouraged. that could be a good thing as people feel more confident they can find a job. dennis: talk to me about shadow job workers. you think there is hope there. explain. >> there might be. so there are two survey that track the amount of jobs being created in the u.s. economy. one we talked about this morning already. we talked about today already, the establishment

so i think they have a structural problem there in which the issue isn't qe or not qe.nt to go back to the united states for one moment here. you talked about how you would like to see them move back sooner rather than later on the quantitative easing. they have promised to keep the short-term interest rate near zero, probably until 2015. how do you feel about that? do you think that's too long? would you like to see them move back that form of monetary combination as well, or is it okay to key the short rate so long for so long provide they begin to stabilize the balance sheet? >> well, remember that the rate that is going to become operative -- in fact, is it is not already, is not the federal fund rates but the interest they're paying -- >> sure. on excess reserves. >> and the issue there is if they wish to keep a certain level of assets in the system and the market is beginning to move essentially, supposedlily finally starting to relend those monies that are on their balance sheet, which eventually is going to happen, when they start doing that, of course reserves

>> what i like about the bernanke getting away from qe, it's going to finally i think put the attentional side which is where i think we've been really wrong. >> you're right, but i just want to add to that. an interest rate adjustment can be a powerful thing, and you're going to have rheal ter the valuations in the stock market. we're going through that night. the other story i want to talk about, a stampede out of bonds, stampede out of bonds, and it's apparently coming from retail bond investors. that's a direct consequence of what bernanke has been talking b.by the way, i believe bernanke. i believe they are going to get out of qe and soon after that we'll start raising interest rates whether i like it or not how tough is this going to be, a stampede out of bonds because the evidence doesn't say it's going into stocks, not yet. >> that's the point, an where is it going? going to the sideline in that's not productive for anybody. the scary thing, larry, the typical bond investor has done very well since the end of the recession so the bond market has done very, very well. and when yo

last two times you've exited qe, we've seen big drops in the s&p. part of that is explained because of troubles in europe. given the troubles in europe aren't over yet, this could come up -- >> also concerned about too big of backup in bond yields? >> you look at it on the scale of things, it's a minor backup. it's what could happen down the road. it's, no, rates aren't going to go up any time soon as the press has talked about recently. but it's the potential of the backup in rates. so when you are basically getting free money at 1% to 2%, all of a sudden paying 3% seems very, very expensive. >> we sort of have been here before in the last few years. june has been i think since 2000 the worst month for u.s. stocks along with september. it was a bad month last year. we've come an awful long way. people have made money at the beginning of this year. i suppose you have to put all of this into context in terms of the recent seasonal patterns and where we've been. >> well, i think that's a very key point. and i think especially when you've got the secon

if they continue their qe, it won't matter to gold. it's still going lower.ey decide to pull bark, that could be very bearish for gold but i don't expect that. if we settle below 1370, it looks like we will, you want to be short gold. >> a buyer and a seller. that's what makes markets. catch more of jeff and griz on on online show and don't miss this one because pimco's tony crescenzi is predicting what the fed will announce and ron paul will proclaim what ben bernanke should do. it's live 1:00 p.m. eastern futures now. >> jackie, thanks so much. we will be there top of the hour online. >>> this news and this new development regarding carl icahn and dell is a perfect time to remind you that carl icahn is going to be one of the big keynote speakers at our signature event, that being delivering alpha, july 17th. there he is, carl and i will have a great conversation over there is hope all of you can be there. if you need more information on that delivering alpha.com. can't wait for that. meantime, coming up on requesting the half," from housing to ipos, to new

if the economy softens, i think they won't curtail their qe or their purchases. i think if the economy improves, and you get, like, a 300,000 nonfarm print or something like that, i think they will curtail some of their asset purchases. so i think he's plainly said what he's going to do, an it's all data-dependent on the numbers. >> it wasn't exactly what he said the last time. last month in may, he said the committee continues to see downside risks to the economic outlook, boom, period. right now, he said the committee sees the downside risks to the outlook for the economy in the labor market as having diminished since the fall. that was the extra comment that basically suggested that things have improved. >> yeah, well, what the ism manufacturing below 50 and some of the other indicators that have come out in the past few weeks, if you lump those all together, it actually suggests there should be another cut or an increase in asset purchases. >> rick santelli, i know you don't want to see that. tell me what the buzz is over there in terms of the sell-off and wh

investors probably happy to have qe replaced by better growth.ed level of growth. kelly, a lot of ways you can spin this and talk about it in terms of whether it's a buy or a sell. today almost certainly a sell. >> steve, just to reiterate the point, a lot of people are trying to wrap their heads around the idea we may be talking about the economy not strong enough for the fed to exit right now which is a totally different nar of it that be what we've been hearing but one that needs to be aired. >> all things being equal, right? if they replaced qe with economic growth one for one, i think the market would be happy. i think the concern is there's not a one for one replacement, that there's really good benefits toq e to stocks, but that stocks may not be giving enough to make up for that replacement. >> steve liesman, thank you very much. major stock sell-off today. we're keeping an eye on it. we're off 200 points on the dow. we'll have a particular look at the home builders selling off but why. we'll be right back. with the spark cash card from c

now, what about the current level of qe and the level of inflation? i don't know where we're going here. there we go. very nice. means easier policy. most people think that the current level of inflation is not going to cause the fed to act, not a concern of the fomc. only 7% saying that. let me throw it back to brian and to mandy here, and we can talk more about this survey in just a sglit yeah, come on over, steve. actually lots and lots of things. meantime, we want to throw this one at you as well because president obama stirred up a little controversy when he said this to charlie rose. >> well, i think ben bernanke has done an outstanding job. ben bernanke is a little bit like bob muller, the head of the fbi. >> yes. >> where he's already stayed a lot longer than he wanted or he was supposed to. >> yikes. >> i'm not sure that he intentionally meant to stir up a little bit of controversy, but that's exactly the effect that has been achieved here. so who is going to replace bernanke? >> well, you know, i think there's two things about that. first, i

the new idea of the 7% unemployment target to end qe in a year was a new announcement, no one expectedat clearly and it completely spooked all of the markets. with respect to mr. bernanke's acumen, i have to disagree with him on several counts. first, it's still a 2% real economy. it not a that great. jobs may be slowing and businesses are not investing and only housing when sales in may ran 13% ahead a year ago and only housing is really strong and i don't think hooefb even a 4%, 4.5% mortgage rate will stop housing, but, but, basic inflation is only 1%. bond market indicators of expected inflation are actually falling. money supply is softening and nominal gdp growth is too low. you know what? you could almost make a case that the federal reserve is now too tight if you look at those indicators, not too loose. look at gold. it got killed today and king dollar holding up nicely. another point, deflation is in the air. that's my take. so while mr. bernanke jumped the gun this week, that's my take. the markets are in full revolt against them, they are trying to say to him, sir, go slow.

valuation has come down in the age of qe. this time around, we do think you know, markets always tend to want to see whatever they want to see or hear what they want to hear from chairman bernanke. but he will probably explain to the market that eventually tapering off the pace of qe is not the same as outright tightening and that might be marginally helpful. >> good luck trying to get the message across. i think that's going to be one of the major issues, ha does that mean for volatility? >> it's a very difficult communications challenge right now. i think people got very used to the extremely low volatility environment during the first five months of the year. implied volatility was exceptionally low. realized volatility, incredibly low. you had some fabulous runs in local currency terms. the japanese market was up 50%, the u.s. up 17% in dollars, with just no setbacks. people start to believe that they're owed a positive return every day. stocks are a risky, volume tiff asset class, but that happens to be where the best re

to taper or not, the question vexing the markets and could they suggest an end to the fed's qe-3 may be ending just as the fomc is meeting today. >>> more bad news for the auto sector. car registrations down 6% in may, the lowest level for 20 years. m&a's on the line in the telecom sector. deutschland shares rallying on a bidding war between liberty global and vodafone. >>> and it is d-day for dish in its race for sprint. will a lawsuit over clearwire jeopardize the deal? >>> plus, hedge fund manager dan loeb presses his case for sony, arguing for a partial breakup of the entertainment businesses. he discloses he's raised his stake to up over 7%. >> all right, it's tuesday. we're into "worldwide exchange." plenty to look at today. just keep your eyes on comments from mr. draghi, the ecb looking at deposit rates with an open mind. >>> meantime, syria's topping the agenda at the g-8 meeting in northern ireland, but how does their nearest neighbor view the civil war? we sat down with israeli president shimon peres. >>> protesters swept through brazil yesterday demonstrating against wast

because of housing. >> you think qe could get even bigger? >> i think the policy-makers have told us that that's a real possibility. >> what do you say then, 1.5 yield on the ten-year again? >> i don't think we're going back there, brian. i tend to think that our trading range now on the ten-year note is probably between 1.8% and 2.5%, but if you notice what's going on, and i think the fed is very happy with what's happening here, is that frank a rear ago was about 1.4 to 1.8. then it moved up to around 1.5 to 2, and now we're just slowly ratcheting it up, and as long as we can keep ratcheting it up and the wheels don't come off the economy, we're objection but the thing you is can't let rates rise too quickly or you're going to stall the economy, and we're going to have to do something more dramatic, and i think the fed wants to avoid that. >> two more questions before i let you go to the beach that's directly across the office in which you sit right now, scott. this is it. currencies are hard to talk about on television, right? people are i

one is that qe into 2014 to which i submit there was some doubt is now kind of policy, by the way. that's a new thing. that, you know, we picked that up in our survey i think three surveys ago this expectation for qe into 2014. that's now part of policy. the only thing i would say, the sort of on the other hand that an economist would come up with, a maybe what the market fears is a policy mistake. thinks is a salve for the tapering. that's the concern if there is a concern that it's a policy mistake. >> good stuff. we'll talk to you soon. >> my pleasure as always. >> the stunning spike hitting home builders hard today. what will the impact of rising rates really be on the housing market? earlier we heard from a citi housing analyst, but now let's talk to the definitive voice on the market, ivy zelman. she joins us on the phone in a cnbc exclusive interview. great to talk to you on a day like this. >> hey, guys. thanks for having me. >> yeah. so tell us, it's got to be the biggest question right now facing the market and the economy at large. is this going to kill the housing marke

will be faced out if the economy does better, if the economy doesn't do better qe won't be faced out. >> yeah. >> think about the troubles over the past four years. if this is our big problem, we're doing well. >> enough transparency already, a little more. isn't an environment with low inflation and moderate growth pretty good on balance for stocks? >> that's a very, very good point. i have been increasingly coming to that view that, you know, usually if you have a business cycle, it tends to last about four or five years, and what happens at the tail end, you get too much inflation and the federal reserve tightens and a recession. if we continue to have low inflation and slow growth, it will be another four years. >> ed, that's a good note to leave this on. thank you so much. great having you on the program. >> pleasure. >>> one of the biggest drivers of the recovering economy and the rebound in housing and today good news there. pending home sales, deals signed but not closed rose to the highest level in more than six years in may and are up 12% from may last year. that rush to lo

we knew qe was not going to go on forever. no way to cushion the announcement, how many, it's been seven, eight years, before there has been any tightening moves by the federal reserves. yeah, the reaction was strong. i'm hoping the spike in the ten year, yesterday, if we can hold that for the high the next month, i'm very optimistic. we had robert fisher. saying we're not going to raise the fed rate until 2015. we had the people bank of coin s bank of china, saying there has been no bad earnings news, it is a re-adjustment to thinking about qe finally going to end if the economy improves. >> jeremy, i hear you there, but tell me what the real effects are going to be on the economy then. >> certainly, people talk about. we had lennar's announcementes in earnings. we saw the home builders really get hit. think about it. later in your program, you will have the case schiller indices. it will be an insurmountable problem. for any long-term stand point, it is still so low for individuals, so my feeling is that, you know, the inter

and how about the qe. that back from 936 billion in the april survey, now 880 billion expected in 2013. that's -- i found this interesting. 370 still expected for 2014, despite -- saying in december 2013 it will be just 1,654 for the s&p and 1,722, about 4.5% higher than it is today, this time next year. bond yields are interesting, also. 2.40 by the end of this year, and where were we, 2.20 is where we closed. 2.80 by june 2014 with a pretty stable federal reserve. so they're thinking this will creep up a little bit. maria, their views on growth, pretty much where they were. 2.1, and this year 2.6 next year. back to you. >> in terms of inflation, steve, that's one of the fed's markers. >> reporter: yeah. >> where are we in terms of inflation, steve? >> reporter: it's interesting that you asked that question. we asked that question to three different -- three different ways, and not a lot of concern about either inflation or deflation for this group right now. they think it's something the fed is watching,

once interest rates begin to rise or qe is pulled back or both, if qe is pulled back, doesn't the stock market have to fall since it clearly rose in large part on it? >> well, that's our opinion, brian, and to rick santelli's point of a few minutes ago. we're in a highly levered economy, and it's not just the leverage or the interest expense of the government or the treasury. it's really the -- the expense of the household sector and corporations, and to the extent that interest rates rises, let's just look at the mortgage market, to the extent that a 30-year mortgage rises from 3.5% to 4% which is basically what it's done, then housing certainly has to be affected. in a highly levered economy, where households basically can't afford to pay much more in terms of interest expense, then, you know, there are critical levels, and, you know, those levels are very tightly bound. it's not the same type of environment, as 5, 10, 20 years ago where you could raise rates and you could expect slowing. if you raised very suddenly and raise that had ten-year up to perhaps 2.5%, then the leverage --