fed increasing rates and what that will do because you'll have a fixed rate. but if you have a variable rate with an adjustable-rate mortgage, that's something you need to look at carefully. you may start to see that rise quickly. but again, as the guest said, it will be gradual. then also keep in mind, with the home equity line of credit, that's what a lot of folks are looking at. those are definitely going to change right now. they're tied to the prime rate, so as we s the prime rate go up, then that means right away for those of us -- i'm not going to raise my hand, but i should -- they're going to see their rates go up very quickly. >> what about credit cards, sharon, because they are notorious for having some of the highest interest rates. they gives them license to raise again. >> right. there are fixed and variable-rate credit cards as well, but most of us have variable-rate cards, so you will see an increase there. pay attention to your bill. a lot of people don't do that. this is the time to open that bill and see what the rate is, and if you need to

mortgage rates as well.to know what the fed thinks. it's important to note, and i think others have noted already, that they lowered their dots by 25 basis points in 2017, so that's a more dovish type of forecast but still the market is forecasting much lower, and i think 2% as opposed to what the fed thinks with their average green dots of something like 3.5% or 3.25% is where we rest. >> you know, brian, i couldn't agree with bill more. look, 2% i think is a reasonable number here on the long-term funds rate or the equilibrium rate. our work shows if you get short-term rates, you know, much above 2.5% that given the amount of debt on corporate balance sheets, that you basically absorb all the free cash flow in corporate america, and so we cannot tolerate is 3% rate. >> do you agree with that, bill? >> yeah, i think that's the key, brian. you know, the amount of leverage, and what fed members and the fed staff, you know, are looking at i think historically is a model that's based upon a system of financial

rates gets raising you to either of those goals? have kept rates at an externally love level and had high balance sheet for very long time. we have considered the risks to and with interest rates it is zero. we have less scope to respond to negative shocks into positive shocks that would call for a tightening of policy that is a totor that has induced us hold rates at zero for this long. we recognize that policy is notmmodative and if we do begin to slightly reduce the amount of accommodation, the odds are good that the economy would and up overshooting both our employment and inflation objectives. aat we would like to avoid is situation where we avoided so long that we are forced to tighten policy abruptly, which -- aba boarding what running andg sustainable expansion. to keep the economy moving along the growth path it is on with conditionsnd solid in labor markets, we would like to avoid a situation where we have left so much accommodation weplace for so long, that overshoot these objectives and then have to tighten abruptly and

, short-term interest rates matter.the value of asset prices and exchange rates, also these are transmission channels. we wouldn't be focus on short-term financial volatility, but were their unanticipated changes in financial conditions that were persistent and we judged to affect the outlook. we would of course have to take those into account. so we will watch financial developments, but what we're looking at here is the longer-term economic outlook, are we seeing persistent changes in financial market conditions that would have a bearing, a significant bearing, on the outlook that we would need to take account in formulating appropriate policy. yes, we would, but it's not short-term volatility and mark market. >> the part where you didn't see changes, you would be concerned and have to move more quickly. are you concerned that if markets don't tighten its officially you may need to do more? >> well look, you know, this is not an unanticipated policy move. we have been trying to explain what our policy strategy is. so

the significance of rate hikes mounts with each additional rate hike. at this point it's a baby step away from a 0% rate. the significance of this is going to mount. you look at the past two rate hike cycles. it popped the housing bubble. 1999 and 2000 it popped the.com bubble. and that's why they keep pledging this gradual pace. >> thank you so much. thanks for getting up so early for us. the financial analyst at bank rate.com. we're going to go to break here on worldwide exchange. nothing but child's play. we speak to a toy expert that has plenty of tips for last minute shoppers out there. >>> yes, we're getting ever closer, only 8 shopping days left until christmas but there's no need to panic if you still haven't finished buying gifts just yet. our next guest is here to run us through the most popular boys and brief us on the brands best this coming season and publisher of the toy insider.com also known as toy insider mom. lori, great to have you so i guess what's old is new once again so i'm looking at the toy that you have next to you right now. y

prime rate. with a higher rate, the fed tries to slow down the economy. with a lower rate, it tries y i stimulate the economy. that's what the fed did with excessive cuts during the financial crisis of 2007. it slashed rates to te zero, with a bin for nearly seven years. raising rates this time will be complicated. when they were lowered to zero and the economy was still in the doldrums, the fed tried to stimulate growth by buying long-term bonds, pumping $4 trillion of cash into the banking system. even with a higher fed funds rate, that money will stay in the system until the fed decides to decrease its balance sheet, which it could do, for example, by selling some of the assets it bought to help keep interest rates low. but that could be a while. attention now turns to the feds the future rate hikes, which are likely to be slower and more gradual than a previous rate hike cycle. that means consumers shouldn't be too worried about soaring interest rates anytime soon. >> so, what does an interes

first of all, if we had raised rates, we would have the possibility of lowering rates. important to markets in setting or determining longer-term yields is expectations about the future path of policy. for a number of years, when we had -- after rates had hit zero, we discussed the reasons that we thought it would be appropriate to keep rates at low levels. as it turned out, seven years almost now at zero rates, we discussed why we thought we would be keeping rates at low levels for a long time. and as the market absorbed the notion that they will stay low for a long time, longer-term yields came down. of course, we had had asset purchases. we undertook substantial asset purchases in order to stimulate the economy. i think those purchases were successful, as well. in conjunction with that forward guidance in bringing down longer-term rates and those tools are still available. >> last question. and real quick, i met with a group of ohio bankers yesterday. and in december, they brought up to me the bazel committee on banking supervision as planning to finalize new rules f

you live off the interest rate. can you explain to our savers and our elderly population why you continue to maintain a zero interest rate given that it appears we're at full employment. yeah, given it appears our banks are stable and given it appears you have no inflation. >> well, so i would say that inflation is running -- i think we're pretty close to maximum employment. inflation is lower than the objective. we want to see that change. the economy is in the sense that you have described doing well, and that is the reason that it is a live option for us at our december meeting to discuss as we indicated whether or not it's appropriate to raise rates, but we do have to ask the question what is a so-called neutral rate at which the economy would continue to operate near full employment and approach price stability and a good deal of research and i discuss some of this in a speech i gave just yesterday suggests that the neutral rate of interest is very much lower than it's been siftically. in real or inflation adju

first rate move. you look at what happened with the two-year note yield now. they fully priced in the move almost at the short end of the curve. it seems to flatten at the far end, which is a sign that maybe they are "set accept the notion that they will be lower and slower as well. she could ratify that view today. scarlet: thank you so much, mike mckee. he will be joining us within the next hour. do not miss our live coverage of janet yellen speech. mike will be back to wrap up her remarks. alix: more now on the war against the islamic state in the middle east. our next guest says a historic upheaval currently in the middle east is not going away and the world needs to be determined to show results and not to blink when challenged by ad resellers -- adversaries like isis. they only understand one language -- force. is a formernett israeli minister of economy. he currently heads up israel's educational ministry and is the minister of diaspora affairs. welcome to deliver television. naftali: thank you

the rate of growth is lower. still strong about raising rates in advance.ediocre job. >> it was good. what is the estimate? >> goldman sachs, 200,000, 215. that is right. it is lower the rate of growth than it was last year. neil: federal government workers. what is going on, senator chuck grassley, finally saying enough is enough. getting paid to sit at home. you are put on administrative leave for misconduct. definitively saying what is misconduct. a lot of federal workers are paid to sit at home. 57,000 workers. more than $3000. >> you are paid. you get to build up your pensions. you know, you move up the pay scale as well. you could be sent home for watching corn. a fight with your boss. the problem is, the rules are really slippery. it is not set in stone what defines conduct. neil: the governor workers at our home, we welcome you. we like you. ♪ neil: close to wrapping up her rub marks. wish you were here. you heard that one. what are you laughing at? dagen: loving your aura. neil: dagen was supposed to appear later. that is not a sure thing now. firs

rate thing?een temperature years since i've been able to ream them how discussing -- when rates come down, it's, like, six months later. they might finally move. that was within milliseconds. >> do you think people at home think you're sarcastic? you ream the banks? really? >> yes. >> it's sticky. it's the way it works. >> that's not true, though. they studied -- >> down -- >> the studied the phenomena. there's been multiple economic phenomena, and it is not. the fed rates, they make more money. i don't know how banks did yesterday. >> scum. scum. >> can i continue here? >> you know -- >> you just disrupted my flow, joe. >> oh, geez. >> how high will they go? the fed twice yesterday said that the future course of rate hikes will increase and will be gradual. fed chair yellen spent time explaining these will not be regular hikes. >> my guess is that the economy will progress in a matter that's not sufficiently even, that we'll decide to make evenly spaced hikes. >> all right, here's early forecast

rate is driving that. that has to do with chinese workers working for lower wages, globalization, our productivity not being that high. i marine again the fed doesn't cause everything. it's certainly not good for the average worker if inflation gets out of hand. if it did get out of hand you'd hear the those same people say inflation is bad for the working claz, you shouldn't allow it. there's a lot of scattered commentary here. >> ken rogofp is a professor at harvard university. the reason janet yellen's small move could have an impact on your bottom line. and donald trump is not back down. >> san bernardino, he was born here but she wasn't. >> i'm off the coast of hawaii. >> we are on the tipping point of an ecological disaster. >> this coral is not dead. >> techknow's team of experts show you how the miracles of science... >> this is what innovation looks like. >> can affect and surprise us. >> i feel like we're making an impact. >> let's do it. >> techknow - where technology meets humanity. >> we're ba

to the median estimate of the longer run normal unemployment rate. committee participants generally see the unemployment rate declining a little further next year and then leveling out. the path of the median unemployment rate is slightly lower than in september. and while the median longer run normal unemployment rate has not changed, some participants edged down their estimates. finally, fmoc participants proceed correct inflation to be very low this year. largely reflecting lower prices for energy and nonenergy imports. as transitory factors holding down inflation abate and labor market conditions continue to strengthen, the median inflation projection rises from just 0.4% this year to 1.6% next year and reaches 1.9% in 2017 and 2% in 2018. the path of the speedimedian inn projections is little changed from september. with inflation currently still low, why is the committee raising the federal funds rate target? as i've already noted, much of the recent softness in inflation is due to transitory factors that we expect to abate over time. diminishi

rates.they do succeed, and this was going to be 25 basis points, and we are not going to have another race for a long time, it probably will not make that much difference. but the fed has a dual mandate. inflation and the job market. we are not at full employment, and there is no installation. we are well below the target, so i guess they do not get the nature to get the rates up. joe: yes, yellen, i feel like if she were right here, she would say that financial or monetary policy works with long legs. she said that in the conference, and they cannot wait to hit these numbers, because by then, if they had to play catch-up, that would really freaked out the markets. that would not be an issue? janet yellen is a friend of many years, so i am no way being critical of her, but like i said, they have been predict thing for years that it would take off and that we would be in an inflationary environment, and they have been wrong, consistently, for seven straight years. it is a little bit of a leap

drop,that's continuing to will be rate fail? we are waiting for the market to open, but we are expecting a downward trend. yesterday in the u.s. we thought stocks drop. we are watching the oil companies this morning as oil rebounds after its losses. we are starting to see a sea of red across the board. this is what happened to the bond prices. the two-year u.s. debt are rising higher, the highest since 2010. at .94% on the two year. on the european side, we are seeing the dollar rally. sachs says at this could go even lower. the say to look out for surprise from draghi. we were expecting so much andriy the bets are out. onld we see a squeeze higher the back of any disappointment? that is what we were warned about. gold, how low can they go? it is the lowest since february 2010. we are ready for a rate hike in the united states. we see significant rallies in the dollar overall. let's look at the stocks to watch in europe this morning. let's step away from the central banks of focus. there were interesting stories out there. green

in the first year of an interest rate hike, usually the fed funds rate moves up by 2%.ven the fed funds is saying four rate hikes. i will be surprised if we only get two out of the fed. that will push yields higher as markets bake more interest rate hikes into the year. do seem to be different opinions about whether we will see more quantitative easing from the ecb. the fed hiked, but they did it in a dovish way. anyou still see this as investable scene? banknder: every central more, in the or case of japan, for example. long-term inflation is so far off the 2% target of the ecb. they are likely to do more in the next 12 months. i would be surprised if we have not heard again from draghi about a potential extension to their quantitative easing or the change in the deposit rate. anna: you talk about how the bank of england could be entering into a rate hike in territory. when do you think that will happen? some economists have suggested they will keep a lid on wages. that means the bank of england is way behind the fed. the fed has raised rates and i think that has paved

the issue is how fast will they raise the rates. most expect the fed to say they'll raise rates very, very sloefl. the concern is the fed's chair, janet yellen, inadvertently or not, may adopt a more hawkish tone trigger be a wave of concern which means traders might sell stocks yickl lquickl. a lot is riding on what the fed is going to do and on their tone. b >>> our guest says the equity market is set up for what will be a rip-your-face-off rally that will surprise a lot of people. jeff, you are saying and your models are saying what a lot of market watchers aren't saying. why do you think we're going to see this rally and over what period of time? >> well, first of all, i think the markets were massive live oversold. they were as far below their 50-day moving average -- as oversold as they've been in the past three years. secondly, you're into this option expiration that everybody's worried about. historically december option expirations have been better for longer term downside protection. last reason is sufficient's entered the

the so-called equilibrium rate is a real rate of inflation, and adjusted rate fell sharply after the financial crisis and remains quite depressed. it is a factor that leads us to believe that even when we start raising rates, those rate increases will be gradual. when those -- when the rate comes down, rates are likely to be lower than the historical norm. are operatingwe in a positive rate environment, if the economy is hit by negative shots, we have tools we can use. our most assured institute of policy is the fed funds rate. so when the rate is low, we have less room to respond to negative shots. it would be helpful to be in an moreonment and give us scope to be stimulating the economy and responding to adverse shocks if the average level of interest rates were somewhat higher and -- i don't want to give you advice on fiscal policy, but a more stimulative fiscal policy would enable the fed to have somewhat a higher level of rates and more scope to respond to negative shocks. >> thank you mr. chairman and madam chair. the recent fomc projections have a long run unemployment rate of

to keep the fed funds rate at the targeted rate. and that will be the most interesting thing to watch here in addition to the fact that there's been a turn towards the yellen era. >> we will discuss that. i know that you have to leave in less than a minute. so let me finish up with you. how aggressive do you think the fed will be in 2016 with raising rates, or really truly does it depend on the data down the road? >> we've gone through this forward exercise. we had quantitative forward guidance. let me summarize what forward guidance is in two words. it's "we'll see." i think that's basically what janet said. it is a matter of feel and looking at the di that. i don't expect them to immediately follow through. i think they'll take some time, digest what happened. but they also have to be mindful in the second half of this next year that they're going to get involved in the presidential cycle. no central bank wants to be involved in the presidential cycle. if they do want to move forward, they might want to front load a little bit, bu

the exchange rate has stabilized. inflation rate is decreasing compared to 2014. capital has been reduced, but this doesn't mean we should relax, sit back, and just wait for the situation to improve miraculously. such an approach is unacceptable. we should be ready that commodity prices and external restrictions will continue for a long period of time. without changing anything, we'll have spent all of our reserves and our economic rate will fl fluctuate around zero. today, countries secure their niches in international division of labor. russia should not be vulnerable. we should do what we need to get done today. we should use our competencies and advantages which may not be there tomorrow. of course, the government should listen to people, should explain to people what's happening today, why we're doing what we're doing. we should regard people as our equal partners. what should be our key priorities? first, competitive production is still concentrated in commodity producing industries. if we change the structure of our economy, this will allow us to address di

to adjust those rates to reflect the pg&e new rates in january and provided that that rate as adjustedalls within that range related to the .2 or dolphin or differentiate authorizing him to move forward with the program. >> you're setting the initial rate and setting our acting to embed in that rate an initial adjustment in january and you're also frankly 30 years subsequent c pi. >> whatever number a half of a scent that's the goal the general manager has to meet; is that right. >> yes. that's definitely a fixed so ceiling so if the cost come in and the other factors that go into the rate setting add up blow that ceiling then that's the rate that the program launches if they're not blow the ceiling they'll have to come back. >> okay. >> i think perhaps that confusion not to exceed terminology that was meaningful in may when the costs were not known now i guess i would go whatever way staff is most comfortable in the flexibility to deal with january when many happens. >> i would feel comfortable with a quarter of a percent because it is so thin now and then you know if we know more you

financial markets don't welcome rate rises. that's not what they do. savers welcome rate rises.elcome rate risers. >> that's been a big point in the media today about what this fed decision may mean. we'll find out later today. >>> walt disney is the top performing dow stock. this is almost a 2% gain for disney as now the press screenings of "star wars: the force awakens" stars to happen. the premiere, the broad rollout coming later in the week. generally reviews good. "usa today" gives it four stars. goldman upping their expectations for box office internationally and upping their eps, 3% for the next three years. just a comment on how well disney monetizes this property. >> how significant a franchise it is. >> you are taking the kids, david? >> no plans to. >> interesting. >> i assume we will hit it at some point. >> a lot of people with young children of 8 or 9 saying i'm not interested. whether they'll learn about it. >> my kids have all sampled the movies. >> have they? >> they have. all of them. there's not a great clamoring that we go. a lot of homework being done at my

that, if we're looking at term rates, despite the fed a probably raising rates who think a year, ratesbe relatively stable. a selloff ining european rates. markets, it's not really pricing yet. your view of the fed in 2016 is in line with what we them.from it contradicts what the market is telling us. future suggest we will see an interest rate hike in march and perhaps again in september. we won't see anything close to 100 basis points by the end of the year. the market is doing is pricing the possibility that the fed has to go slower or stop. the fed can only move according to its models. it's probably the way they are going to go. thatworth remembering watching the data is not the same thing as watching the impact of those rate hikes. that will take 18 months or so to come through. i think with the market is looking at is the extra sensitivity of credit markets to rate rises. of course, the fact that terminal rates are probably lower than they were in previous cycles. a further rateg hike. the market will be taking those rate hikes out of the forward curve. get the market pricing in

more. >> even unemployment rate if it false 4.9% is rate the federal reserve sees as a long-term rateuntry. and that also speaks to the would that janet yellen loves unemployment rate as indication of slack or lack thereof. >> keith mccullough on show makes a point if federal reserve raises interest rates into a slowdown they are going to have a problem listen to outlier reading about the commitment at standard charter says yell-will wut in 2016 if she raises in two weeks is she going to reverse course. >> if in recession territory what protecting. >> a problem with wages we have 70 positive growth it if not seeing wages move right direction not going to have consumers -- 2 1/2% -- >> gdp grow, we -- >> get significantly stronger she will she will have to do that because corporate earnings are going to get flatter we have seen earnings recession two quarters in a row. maria: you think we see an tr increase sa and trut. >> one and done sit backdate dependent one rehabilitative that is it i don't think we will be above 100 base points. >> fiem jobs' report of the year out 15 minutes we

the truth is the official unemployment rate, the headline rate you see is 5%. the participation rate were where it was before the great recession, the unemployment rate, the official one would be like more like seven or eight percent. that's a real concern. on the other hand, everything is proportionate and companies are hiring. people are finding jobs but the question is are they finding jobs in with their education and with their experience and what you need to live on today. host: we're talking with nelson schwartz. i want to go back a story. rates are going up what could go wrong. as you point out in your piece, the fed embarking on a new chapter in monetary policy with regard to the feds's policy and the impact it has on consumers in the next year. what are you sensing? guest: so far, logistically, the rate increases got off successfully. this is the first rate hike in nearly ten years. there are people on wall street trading desk who never lived through a rate hike before, at least professionally. i think the fed is sort of -- it's kind of feeling its way

however, the path of the rates. it's telling people that it is taking it slow, and it is perfectly willing to accelerate or reverse course depending on what the outlook looks to be in the economy, in the u.s. economy and in the world economy at large. >> so we are waiting for more detail, janet yellen expected to give a news conference 20 minutes from now. what was interesting, the skepticism prior to this announcement, in the event the economy decision was unanimous. there were no naysayers today. >> tom, thank you. let's go to well-now where in a gesture of good will during u.n. backed peace talks. sources have told al jazeera that 375 houthi prisoners are swapped for 250 government pro fighters. it happened during a seven-day trugs. many are accidenta skeptical that there will be a long-term cease-fire saying both sides have failed to honor the cease-fire. the yemen cease-fire is on the verge of collapsing. according to the saudi-led coalition. there have been reports of fighting that has broken out in the city t

not the real unemployment rate. either you have to take into account the fact that people have stopped looking for work and all of that. >> if more people are working and unemployment rate goes down, that would suggest that maybe income growth cog kick up a little bit. do you expect that in 2016? >> at this point in the business cycle, you would expect that. wages have started to move higher. we started 2015 with wages 1 1/2 to 2 range. as we end 2015, in the 2 to 212 range. i would expect next year 3 1/2 to 3% range. incomes are running higher than they have been but still below where they were prior to the great recession. still work to do on wages and income. >> let's talk interest rates. the fed last week raising interest rates after a long series of cuts and zero rates for the past six, seven years. do you think the economy can withstand that? do you think that's a headwind too many? >> no, you know, i think in some cases the start of the fed rate hike cycle we saw earlier this month is actually a positive. it

. >> let's get straight to a rate decision out of norway where it says it's keeping it's key policy rate unchanged at .75%. to be honest going into this rate decision that was going to be a very close call. jp morgan, for example, expected the probability of action to be around 40% but we got no change in the main interest rate but let's have a look at some of the commentary because the outlook for the norwegian economy is a drop in oil prices just over the last quarter and also the outlook for the economy. now the norway central bank, household consumption and private sector investment expected to be lower than expected and also lower investment in the oil space. but look at how it's fairing against the euro. it's weakening and that means strengthening in the crona. so that was a close call and maybe a little bit of disappointment here that they did not move just yet but many analysts out there now expected them to cut rates by 25 basis points at the march meeting. >> let's check in on the survey and we're looking at declines at least for the month of december. as for if november read w

,ome say the fed could cut rate hiking rates, before the ecb raises rates again. i think we are penciling in next onends that the happens in 2019 -- mark: well before the ecb cuts rates? kit: by the nature of this cycle, if you think that the u.s. economy will start at the point where there is no spare labor, the rate of growth picks up, so inflation tries to pick up and rates go up, and that is how you create an economic cycle. the clocks do, start at that point. i think mark is making some great points and we have been so focused on the divergence. i do wonder though -- do you think we may be overplaying this divergence in the years to calm? kit: divergence of some things. important in that it moves the dial. one of the important things about this divergence, compared tonight's many for when the fed was raising rates very aggressively before the economy is notin 1995 -- the fed going to put rates up quickly. it will be the most dovish rate raise we have seen, i would imagine. we can have divergence on some showsries, but as the ism this afternoon, you will get d

rate than long rates. fed, there is an interesting question of whether the fed is effectively able to move those long rates at all today. whether they still have the capacity to move those long rates. they still do influence short rates on the interbank markets. you might as -- you might expect it to affect funding costs more than lending rates with a negative affect. anyway, so -- yes, go ahead. alix: hang on, i have some breaking news i want to get out and then we can chat about more banks. mikey earnings crossing, quite frankly it looks like a blowout order across the board. in terms of specifics the company made $.90 per share. the revenue came in lighter, $7.7 billion. the really big news is all about the future order numbers. if you strip out currency they are seeing a 20% rise in the estimate for 13%. it was pretty much across the board. it's gangbusters there, they were relying on china for a lot of growth potential. there was a lot of interest in what they saw in the country. 34%, estimates were f

matt: the market implied policy rates. of countriesa list as far as rates.he eurozone for this morning. the implied policy curve is lower. the divergence from the historic implied policy curve is more than i have ever seen. negative 2/10 of a percent at the one year level. it is amazing how much lower this goes at the front end. stephanie: what is your take? bill: the ecb is anxious and flashes -- inflation moving back towards target and are concerned about deflation. talk about the types of assets they purchase, will they expand the types to also include government sponsored, effectively, if they go up to 85 billion euros a month and expand the asset types they buy they are cleaning us out of bonds. thehanie: my disappointment ecb being anxious, what is more -- what is more asset purchases going to do for their fundamental economy? it is the street a waiting to see, without fundamental changes, their asset prices will go up. : a transition mechanism into the real economy is what is frustrating. what we do about qe, inflate asset prices. it actually also mak

rate and those interest rates will adjust. there are credit card rates that have moved up slightly. remember, we have very low rates and we have made a very small move. >> met him chair, how concerned are you with interest-rate risk in banks now that we have ended the zero rate era? is that a factor in decisions going forward? risk yellen: interest-rate at banks is something we have been monitoring carefully for quite a long time? the community organizations that we work with, part of our supervision has been ensuring that they manage appropriately interest-rate risk. ,arger banking organizations they are subject to stress tests and capital planning. these scenarios that we have presented in each of the last three years, the look at their would beo withstand much sharper, increases in interest rates. we are envisioning what happened. we want to make sure that if there were sharper interest rates, unlike our expectations, they would be well positioned to handle it. and we've concluded that their capital positions are sufficient

raising rates. it's also not going to change if they raise four times next year or two times next year. for the record, i think they're going to be very cautious in terms of the glide path going forward. it's more like two or three rate hikes next year. >> one year after the fed hikes rates, josh, the s&p is up on average 14.5%. if you think the fed is going to move, where not be long equities? isn't it a sign that the economy is in a place where we can handle the rate hike that it's time to get off the zero interest rate policy and try to get back to some form of normal? >> sure. a couple of things on that. the first is what we're seeing financial advisors do across the wealth management industry is exactly what you would expect. they've been shortening duration on the treasury portion of their asset allocation mogdzs. the data that we've seen shows that they're moving out of things like the ief, which is an intermediate term treasury etf, and then moving into the iei, which shortened things up to

itself if the fed raises rates.etty: i thought you going to tell me something like, back in 2006, the friends episode had their finale, american idol -- whatever. anyways. [laughter] should have known. i know you are getting ready for the battle of the charts. let's get a look at the biggest business flash. -- having a one under 79 hour marathon. the department chain will be open from 7:00 tomorrow morning until christmas eve. they think shoppers will make late-night visits after seeing the star wars movie. espn has suffered the steepest loss in response they are revamping the sportscenter franchise for mobile viewing and online sharing. sportscenter membership is down 10% this year. krispy kreme wants to move into starbucks territory. there are now doing more to promote coffee. location, workers are grinding beans and calling themselves for recess. themselves baristas. you can always get more business news at bloomberg.com. are the european stocks rallying or just holding on to the gains? a lot of questions are abo

it creates rate instability.eesaw in that everything looks pretty stable on the downward side of the seesaw, until someone puts a couple ounces at the right time on the other side, and things sling violently in the other direction. issense is really the fed reactive, not necessarily a cause of some of the issues. the politicians are really to blame in that they build up a high debt level and leave it to the federal reserve to eventually monetize that debt. is they don't i think they will have a fair level of default, but historically if you go back 5000 years on the currency that is not anchored by gold or another currency, historically the politicians are taking the opportunity to monetize. the debt burden right now is more like someone running a marathon with a bag of rocks. joe: mark, you heard what frank says, but i still want to get to this question of what will make its way. even if the argument is that monetization is what's keeping the whole market, keeping everything in place, why can't that persist for

fed funds rate and those interest rates will adjust. there are some consumer borrowing rates. credit card rates that are linked to short-term rates that might move up slightly. very low ratesve and we have made a very small move. how concerned are you with interest rate risk and banks now that you have ended the zero the .25a and began percent rate era? is that a factor in decisions going forward, it is -- is it something you are concerned about? ms. yellen: interest rate risk at banks is something we have been monitoring carefully for quite a long time. the community and smaller banking organizations that we work with, part of our supervision has been ensuring that they manage appropriately for interest rate risk, and the larger banking organizations that are subject to the stress test and capital planning, the scenarios that we have presented in each of the last three years, look at their ability to muchtand what would be sharper increases in interest than we are envisioning would happen. we are making sure it will sharpen increases u

fed funds rate and those interest rates will adjust. there are some consumer borrowing rates. credit card rates that are linked to short-term rates that might move up slightly. very low ratesve and we have made a very small move. how concerned are you with interest rate risk and banks now that you have ended the zero the .25a and began percent rate era? is that a factor in decisions going forward, it is -- is it something you are concerned about? ms. yellen: interest rate risk at banks is something we have been monitoring carefully for quite a long time. the community and smaller banking organizations that we work with, part of our supervision has been ensuring that they manage appropriately for interest rate risk, and the larger banking organizations that are subject to the stress test and capital planning, the scenarios that we have presented in each of the last three years, look at their ability to muchtand what would be sharper increases in interest than we are envisioning would happen. we are making sure it will sharpen increases u

with wholesale water rates and a number of action on power rates so the policy the itself is composed of 4 principles the first be affordability relates to the level the stability of roeven harasses with the long term trend compliance with the late regarding state law contractual sufficiency relates to if you cost recovery you recover all the costs of enterprise and transparency relates to how the commission goes about developing vetting and proposing and adopting the rates here's some the progress related we regularly show you where the typical bell for water and sewer sophomore puc services compares with other local utilities and we regularly present the 10 year rate projection with the 10 year capital plan and made adjustments in the last study taking form some the rates more the clerk will take the roll to cost of service principle and be compliant with them and the great making has involved the transparent process with the oversight by the revenue by the oversight committee and siding and the rate fairness board and commission you know as we look at the policy as i reviewed it i

to adjust those rates to reflect the pg&e new rates in january and provided that that rate as adjustedalls within that range related to the .2 or dolphin or differentiate authorizing him to move forward with the program. >> you're setting the initial rate and setting our acting to embed in that rate an initial adjustment in january and you're also frankly 30 years subsequent c pi. >> whatever number a half of a scent that's the goal the general manager has to meet; is that right. >> yes. that's definitely a fixed so ceiling so if the cost come in and the other factors that go into the rate setting add up blow that ceiling then that's the rate that the program launches if they're not blow the ceiling they'll have to come back. >> okay. >> i think perhaps that confusion not to exceed terminology that was meaningful in may when the costs were not known now i guess i would go whatever way staff is most comfortable in the flexibility to deal with january when many happens. >> i would feel comfortable with a quarter of a percent because it is so thin now and then you know if we know more you