more on the fed minutes coming up later. michael for rowley will join me at the bottom of the hour right here on "bottom line." president obama said today those responsible for delaying treatment for veterans will be held accountable. his remarks, missed growing political pressure for -- his remarks, amidst growing political pressure. come amidstks growing typical pressure. simon president did secretary shinseki. the american legion and a growing number of lawmakers, senators have called for shinseki to resign. i made these reports of veterans dying while way for carrot the phoenix facility. there are allegations that workers were hiding the wait data manipulation and weight issues all over the country. colorado, wyoming, texas, florida. the president said, if these reports are true, it will not be tolerated. but first, he wants the facts. >> i know the people are angry and want [indiscernible] i sympathize with that. but we have to let the investigators do their job and get to the bottom of what happened. to know the deserve

changes that the fed has put in place. she also talks about financial stability, addressing concerns about possibly bubble starting to form. to me walk you through what she had to say. she said the first-quarter slowdown was mostly due to transitory factors like the weather. she says many indicators indicating a rebound in spending is underway, putting the overall economy on solid track for growth. she goes on to say labor market conditions have improved appreciably but still far from satisfactory. she also talks about the stagnant wages out there, another indication, she says, of slack in the economy. says -- risks,es three geopolitical problems. she does not say ukraine directly, but you can infer that is what she is talking about. she also points to the recent numbers in housing as being a cause for concern. she goes on to talk about the four guidance changes, the likelihood that rates will remain low for some period to come. she says -- finally, on the topic of financial stability and bubbles, she says -- she says, basi

the fed had the knowledge, tools, and political fortitude to exit from the fed's extraordinary monitor actions in interest rates and balanced sheet before the inflagsry outbreak. if the fed has an unsatisfactory fed rate, the task is difficult. today, i'm hopeful you can enlighten the committee on several points. how much is due to statistical factors and how much to all-star nes. can it create a price inflation that may not be fully cap thoroughed by the p.c.i. index. o they reflect the strength of our economy? as it created more uncertainty and under mind credibility. and when will we return to a rules-based monitor policy. fourthly, is the federal reserve bank of san francisco connect that -- correct that higher individual taxes including higher rates on individual capital and dividends are principally the main cause of drag on our economy. is there a greater way than the present sequester and ax of the budget act of 2011. finally, is the fed willing to make its balance sheet more transparent. lit include holdings of maturity value and purchase prices for each issue and the current

the fed believes that because the wages didn't fall out right during the recession, the fed doesn't think it will face this problem any time soon. but, when the employment rate does get back towards normal the fed is going to have to making the call on whether krueger has it right. told they were responded to his ideas he said i guess that is better than being ignored. >> chief economist at moody's. mark, let's talk a little bit about the job market because in those minutes the fed officials said one of the growth risks to the economic growth is a slack in the job market, what is your take on the job market? how is it doing? >> it is improved, much improved. we're creating a couple of hundred jobs per month, translating to 2 and a half million jobs per year. in most cases it is considered pretty good. at this pace, unemployment continues to decline. but that is the rub, the unemployment rate is still very high. well over 6%, there are still a lot of people out of the work force that probably would like to be working. a lot of under-employed. when you add it all up the job market is much i

they're talking about stuff the fed has to figure out. if your question is when are they going to raise rates and when is the information on that? there is no information, in part because the fed provided that information. the market has digested it and i think the fed is not feeling a need to redirect. where are we? the market generally believes the first rate hike will happen in the second or third quarter of next year, with some uncertainty about the balance sheet. i don't know that the market is craving information. >> i understand. >> i think the market knows that, the fact is the tapering has to end first. the thing about rate hikes, not yet, and then there's a question of how long that period of time might be. >> a considerable period. >> and then there's the question about who wins the debate. there are some who think that the financial -- the old financial rules aren't really that applicable, and others think the real economy -- like the unemployment rate argument, and -- so we have two sides both of them are casting doubt. >> so

did you see anything in the fed minutes? seems more about logistics, looking ahead to the time that they will have to raise rates and they are trying to figure out how they are going to do that, right? >> that's exactly right. the most interesting part was the forethought to discuss how they will move away from the accommodation and back towards normalization n.no way does this signify a readiness of fed officials to move rates any time soon, but what this does say is that they want time enough to consider a whole host of opportunities and different pathways to raise rates, and they also want to signal to the market that they will have a plan in place when it's appropriate to begin to raise rates, so adding some more confidence back to the market. >> as this is happening, the dow didn't move too much. we added about ten points. keith, that's a change from the recent past anyway when any time the fed minutes came out, even if they didn't say anything, we'd have big selloffs? >> i think so. the danger here is that we confuse ha

this would put a floor underneath money market rates. >> that's been a concern of the fed, of the fed'swhat has been happening with traditional fed funds rate, the short-term interest ra that you are able to change? >> i think right now everything is working fine but it's a question of control. the better control we have, the more confident people will be in our ability to control inflation. people are more confident in our ability to control inflation, inflation expectations will stay anchored that will also keep inflation in check itself. so i think it is very important that people in the marketplace and households and businesses understand that we not only do we have necessary tools, we have more than sufficient tools to do the job to keep inflation in check over the longer term. >> but as you know in the not too recent past the fed has had some communication slip-ups, perhaps to be blunt. so then how, how are you going to get the word out? and how are you going to translate all of this to the average investor, to the average consumer and what will it mean for them? >> well i think t

people are more familiar with the fed funds rate. think they will still rely on that as a communication channel but create a corridor where the reverse repo rate will be a floor and the roe rates will be banned. they'll try to raise rates by moving those over time. they have a lot of work ahead of them in terms of educating people. i think the market will come around to understanding where this is a time where they had extraordinary easing. they can't shrink the balance sheet. that ill ha they'll have to use the unconventional tools. >> the market assumes the fed is on cruise control when it comes to tapering. is it really? >> i think so. what would require the fed to stop tapering would be something dramatic that's coming from left field. not knowing the outcomes of the future that you have to take as your base case if the we can it market is down 10% over the summer, there's a probability that it will stop tapering or at least rethink it. it needs something dramatic to stop the easing or the tapering of the easing. i think that sets

it all started south when the philly fed chair made bullish comments about the economy saying the fed may need to raise interest rates sooner rather than later. that is not what investors like to hear right now, of course, but you had bill dudley saying something slightly different and art cashin takes issue with all of that. all kinds of reasons why we're selling off here. >> kenny polcari is already shaking his heads. we've got investing legend bill miller coming up, bullish last month when he was on this show, so has that changed? we will find out when we ask him next hour. >> gee whiz technology for you as well, a usb port for your iphone and ipad, not exactly, but the maker of this device we're going to show you says his invention will serve that same purpose essentially where you can take data from your pc or mac and transfer it into your iphone or ipad. how big of a game changer would that be and how can you invest in it? have the person behind the idea coming up later on "closing bell." >> here's where we stand in the markets, and we're focusing on stocks today. talked a lot a

we have inside the fed's tool box that hopefully sometime next year if the economy is going year theed will begin to raise rates and use all the tools in order to keep interest rates, normalize interest ñrrates. for "nightly business report," i'm steve leesman. >>> just when you got used to a whole vocabulary o-- >> now we have term repot. >> i'm going to audit his report after that. >>> i'm tyler mathisen, thank you for joining us. have a great evening, everybody. we hope to see you back here tomorrow night. >> the following kqed production was produced in high definition. [ ♪music ] >> this is kathak, an indian dance form. >> chitresh das: it's a magician! >> kathak master pandit chitresh das shares the secrets of his ancient art form. >> chitresh das: i call it meditation in motion. >> mark jackson: kain dies ... >> in the last few years mark jackson has invigorated bay area theatre with his plays and direction. >> mark jackson: theater seems to me the most contemporary art in that it's literally in the present moment. >> and midori performs in san francisco. francisco. this time

sequence of about four questions all aimed at the same goal and that was trying to get her to commit the fed to start raising rates at some point in the future. she would not go there, perhaps learning her lesson from that fed news conference a couple of weeks back where she throughout the figure maybe six months after tapering ends. she says the data will drive the fed. >> she doesn't pry some investors when she talked about her worries about the housing market. the one newperhaps wrinkle we heard regarding the economy and the risk out there. she talked about housing and how

complexion of the fed. there will be big changes in the federal reserve. >> you will see stanley fischer, on board. leaving theoe is st. louis fed and coming from the philadelphia fed to cleveland, three new voters coming in the next two months and that will change. >> last time we saw a rate hike from the fed was 2006. now already wolfed down but they are looking set to gobble them up in a deal valuing the israeli food group at about $2.6 billion. middle eastern editor elliott gotkine has more. this has been a long time coming, hasn't it? >> there's been months of wrangling over this deal over the possibility that there will initial public offering instead of the sale. they are known as strategic because they make longer but they are many, many times more strategic to israel supporting scores of farming communities. as the number one food producer and distributor in israel with seven of the top 10 food brands and israel. politicians were expressing potential opposition to this deal. the socialist farming co

we have inside the fed's tool box that hopefully sometime next year if the economy is going year theed will begin to raise rates and use all the tools in order to keep interest rates, normalize interest ñrrates. for "nightly business report," i'm steve leesman. >>> just when you got used to a whole vocabulary o-- >> now we have term repot. >> i'm going to audit his report after that. >>> i'm tyler mathisen, thank you for joining us. have a great evening, everybody. we hope to see you back here tomorrow night. >>> tonight on "revolutionaries." >> marketing and technology are two sides of the same coin, and every, every new product and revolutionary product requires some sort of evangelism. ♪ >> regis mckenna is a pioneer and high-tech marketing in silicon valley. his work at apple and other legendary companies brought information-aged marketing to the masses. john markoff of the "new york times" talks with regis about his career, his work and his relationships with revolutionaries ike apple's steve jobs. major funding for "revolutionaries" is provided by the intel corporation. >>> whe

that is where the fed story is going to go. the equity's response is muted. but the tenure sold off the same amount. that means the yield curve is not changing. the yield curve has been declining and almost taking out the october lows. >> i believe it is near a six-year low. >> that is one of the headwinds i think investors have to be confident of -- cognizant of. we want to see the 10-year selling off more than the two-year. that is tricky given the fed has shifted to guidance over the longer-term. >> the wage rate growth came in at 1.9%. oft was short of forecasts 2% overall. in terms of your other big takeaways from the jobs report, were you surprised by the market reaction? >> you would have expected a slightly better takeaway from equities. we look at the broader tape, have been in a sideways consolidation for several weeks. i think a lot of people have reservations about committing to a rich market. the price earnings multiple for the amount of growth out of earnings is high right now. i still think you don't want to be too bearish. there are a lot of i

>>the stock market is reacting already to the fed and gdp. now today we have the ism number coming into the market. what do you anticipate? >>i think we'll be looking very closely at the jobs number. yesterday at the close of the fed meeting, you saw very little reaction and very little change in the statement. we closed at a record high and i know people like to get excited about that. i get excited about it too. but you have to realize that the month yesterday basically closed slightly up on the dow and slightly up on the s&pboth less than 1%. the nasdaq was slightly lower. the record doesn't really mean that much in people's portfolios and i think it has to be looked at in that vein. the ism number while important, when it's inline with the non farm numbers the way it is, it's really going to be shrugged off. >>as far as that jobs number, are traders likely to sell on a good number or on a bad number? >>that's an interesting point because lately the really good numbers have sort of been a sell signal because there's anticipation that then t

liz: the markets react to the fed minutes just released giving us strong hints about the feds if you would be a comment we will have insight from two former fed officials plus complete market reaction. the real deal on retail, lows joins home depot in reporting a jump in sales this month, but is it too little too late to save this quarter after the brutal winter? we have two of the smartest retail minds around to tell us whether brighter days are here and whose best poised for a breakout and ebay hacked, the web retailer says customer e-mails, addresses and birthdays were stolen. it's urging all members to change their password. ebay with seen as a model for cyber defense. are american companies now defenseless against savvy hackers? we take a closer look as countdown to the closing bell stars right now. liz: good afternoon it is the last hour of trade and in the wake of the federal reserve it minutes from the most recent meeting the markets are not shaken, but you could say they have been stirred up and we have little froth for the bulls to drink at. industrials just about three to f

the head of the new york fed. everybody looks to the new york fed for guidance. rk fed. after him came mr. dudley who we will talk in just a couple moments. liz: exclusively here on fox business. meantime we need to get to nicole of she is on the floor of the new york stock exchange. it started with retail names coming in with terrible earnings. that really started to color the markets but it has to be deeper than that, right? >> it really set the tone. when you talk about some of these retailers we saw new lows for dicks sporting goods and urban outfitters. tjx, parent of t.j. maxx down seven 1/2%. some gave guidance that was weaker, weaker traffic. dixs in particular with weaker hunting and golfing. david: it wasn't just retailers. material stocks not doing as well. alcoa, caterpillar down almost 4%. >> absolutely right on. caterpillar is nearly negative 30 dow points. we're down 132 points right now. alcoa, another name, aluminum, to the downside. liz: not all red. two entertainment names moving to the upside. lions gate an dreamworks looking pretty good. >> sh

or the fed funds rate chainbreaker? >> i think having all of these tools is potential the biggest power of all. what the fed doesn't know is which strings to pull. if you think about it as a big dam draining the liquid pool, there's four or five different gates. the right mix is what the fed doesn't know. we're going to have to follow all these things. i don't know that any one continue lard will be seen as more powerful than the other. >> and which one will be able to hold occupy -- >> certain the ax. >> certainly the ax is the most fun. >>> stick around, steve. we have a new survey which says 47% of the unemployed have completely given up looking for work. let's bring in bob. bob, it's great to have you with us some of your findings were quite disturbing. what was the main reason who have just given up? >> well, they've given up, because they think the economy has not rebounded as well. they don't believe the jobs are out there. many have been looking for a long period of time, or become discouraged. consequently they

statement was in your to the new york fed. it is going to be a gradual return are the next 2-3 years of economic conditions. . would you be willing to give us thection relative to policies we could take or not take and the consequences of accelerating the movement to where we want to get to be on two or three years or disincentive rising and pushing it further out. that is causing businesses to underperform. >> i agree with you, my own discussion with businesses, i hear the same thing you're citing. concern about regulation, taxation, uncertainty or fiscal policy. long-term budget deficits, we can see in cbo's very long-term projections that they remain. tot there is more work to do put fiscal policy on a sustainable course that progress has been made in bringing down deficits in the short term but a combination of demographics and structure of entitlement programs and historic trends in health care costs. we can see over the long term deficits will rise to unsustainable levels relative to the economy. we also can see very clea

the fed balance sheet is nearly $4.3 billion. w could chairman yellen and her colleagues whine that down without actions being disruptive to wall street and global markets? >> they will do it so slowly -- the signal is the one not sell assets. they will rely on stopping reinvestments, or letting them run off when securities mature, and that will mean the balance sheet will not normalize until take eight will years to get the balance sheet back to its appropriate level, and that is how you do it if you do not want to disrupt financial markets. >> and, i guess it is $4.3 trillion. >> i was going to correct. [laughter] were talking about billion, this would not be a conversation. michelle girard, thank you so much. >> nice to see you. >> if you have a college loan, you might want to pay attention to today's treasury bond sale. we will tell you why next. ♪ >> college students may want to watch the result of today's 10 auction of the 10-year treasury note. interest rates will be determined by the bond sale. janet lauren covers higher e

do you think the fed should be improving its guidance? y difficult at this stage. we have been through enormous structural upheaval through the last year. what we have now got is a economistshere two can look at identical data and come up with two very different conclusions. it is unusual for economists to disagree like this. clearly. that is the worry. how can the fed give guidance -- i don't think janet yellen is dovish, actually, i think she is dovish about the labor market -- and then you have governors coming in who will be a bit more hawkish, in terms of assumptions about capacity that exists, you end up with very different conclusions. >> is that the problem that the bank of england is going to have come with personality changing in the next couple of months? becoming moreons unbalanced for some of the nine members. does that push forward interest rate hike expectations are not? >> the issue in the u.k. is that the markets are used to the fact that there is a wider range of opinion from the bank of england. in the past, we have seen

would change the fed? no. is why the lowballer looks like where it will stay. >> is 200,000 the key question? 80,000 in either direction. within 80,000, the market for the dollar will be stronger. if you start getting 80,000 more, now you're talking 300,000. now you're talking blood and guts and gore. now it is getting interesting. on the other side, you're talking about the low hundred thousand. >> it is a wide range, isn't it? >> you have to be 80,000 away from the number to really get things going and get the ball back up again. why would the fed flip the button? >> a little bit of turbulence and then back to normal. what about the ecb and what they will do in the weeks ahead? we have unemployment numbers coming out of the eurozone later today. we are not expecting to see any change in that number, once again. >> inflation numbers from germany were lower. numbers unemployment do? it is most important number. the buy sell indicator of the eurozone. >> some people talk about a number of indicators that the ec

what the fed can't know, can they even set an interest rate. people may not be bothering themselves whether it is going to matter an awful lot. >> you almost get to the point where there's too much tranparncy here, where there are too many conflicting statements. >> wow. we're going to know too much? >> when you look at the market reaction, market doesn't know which way it is going. fed is coming across basically like a circular firing squad. >> steve, we've been making it up as we go along. they have been, at the feds, since 2008. it shouldn't come as a surprise that they're still making it up. we are in unprecedented territory, aren't we? >> i think that's right. there's never been $4 trillion of excess reserves out there. they'll try to get to a certain place and do so without disrupting the economy. effectively they are trying to put brakes on the economy. one analyst said that every book on banking is going to have to be ripped up because right now the thinking is that it is a closed system. one of the things the fed does when it does rever

latest on the fed. l with us for a few final thoughts is andreas utterman. billion euros46 of assets. give me a sense of the impact on the fed on emerging markets. they are is still value to be made. -- there is still value to be made. >> the impact is clear. it is on the fund flows throughout 2013. dsd in february, 2014, fun being withdrawn from emerging markets. emerging risk markets, equities and bonds, they're relatively illiquid. it will have an disproportionate impact. that is an opportunity in my mind, given that there is long-term value there. better growth than any ecb world. it is better than the gdp ratios. that story will go on and on. as we said before, i prefer the debt to the equity assets. one has to be careful. the eastern european crisis is showing that one needs to be relatively discerning there, but in asia and latin america there are significant differences between markets. we like poland and indonesia, mexico and brazil. >> i was going to ask you about brazil, because there seems to

the fed has time to make the correction. >> john, you.her this panel, this conference here. there are a lot of critical factors about the fed. you're critical on the lender of last resort. critical about the policy rule that it is following now. could you tell us if you were to set fed policy right now for what it is, how would you shape it in terms of quantitative easing and the interest rate? >> i would go back to the kind of policy that worked so well in the 'ites and '90s until you had this recent moderation. a lot of papers at this conference will show you get much better performance with that kind of policy. how would you get there? i say advertise back to normal policy. janet yellen said some things about that already. i would say to outline a plan or strategy to get there and not to be ambiguous about when it is going to occur and how it is going to occur. >> where would you set the fed funds rate right now? >> right now? 1.25%. >> not 0%. >> monetary policy is very delicate. you have to be careful, and be clear. you jump in quick

quoting the last fed statement and saying the current fed funds target will remain low for, quote, a will remain below what's considered a normal level even once employment and inflation return back to the fed's objectives. current comments she's saying the recent weakness was mostly due to transtorre factors and mentions the harsh winter weather and does say many recent indicators such there's been a spending and production rebound in the next several months and the economy on track for solid growth in the current quarter. does not put a number on it. forecast the economy will expand at a somewhat faster pace this year. maybe somewhat is a little bit of a downgrade. housing activity, though, she says has remained disappointing and a risk to the forecast. the labor market continues to improve but still far from satisfactory. she cites long-term unemployment, those long-term unemployed and part-time for economic reasons being both at historic highs. low wage gains is a sign of substantial slack. inflation remains low and unemployment will decline gradually while inflation will move to

janet yellen is chair of the board of governors with the fed reserve. she also serves as chair of the open market committee. disposition, she served as vice chair of the board of governors. she is a professor emeritus at the university of berkeley where she was a professor of business and economics. she has been a faculty member for over 30 years. she also served as an economist for the federal reserve board of shernors and on the fact -- graduated summa cum laude from brown university with a degree in economics and a peach in economics from yale university. welcome. ph.d. in economics from young university. welcome. >> thank you very much. i appreciate this opportunity to discuss the current economic situation and outlook along with monetary policy for turning to some issues regarding financial stability. real domestic gross product went up to an average annual rate of and a quarter percent over the second half of last year. a faster pace than in the first half and during the preceding two years. although real gdp growth is currently estimated to a paus

the program. >> a happy program, a chatty fed and worries about the bond market. what does it mean for your money? joining us now is michelle girard, chief economist at rbs and author of the new book, the leading indicators. zack, michelle, thank you both for join us this morning. this week we saw janet yellen testifying before the house and senate and she basically said the economy is improving, but it still needs help. the markets seemed to like what she said and do you agree with the comments and were either of you surprised by the market reaction? zack, why don't we start out with you? >> her comments were consistently with what her comments have been all along and ben bernanke's comments. the only thing that hasn't been consistent is the way the mar t markets have reacted to the changes in grammar and a comma going to fr one to the other and it speaks to a fragile economy which is looking at a rather a little bit like deer in headlights from the 2008 and 2009 crisis. nothing is particularly surprising. the fed has said they will have an extremely loose, accom

you hear people saying it's all because of the fed. i just don't think that's the case. >> thank you both very much. >>> up next, we are on the gates, buffett and munger. they might be worth well over a billion dollars, but only a penny for their thoughts. find out what these three old friends think and talk about behind closed doors, also, what has one of the titans so concerned. >> i'm all by myself in this, i feel very lonely. >> and later, getting your money questions answered. is a financial adviser worth the price? how do you find one you trust and what can they really do for you? as we take a break right now, take a look at how the stock market ended the week. >>> ever wonder what they talk about when they get together? we sat down with thee of the world's richest mens. warren buffett, bill gates and charlie munger, we had a wide ranging interview where they talked about their views on the market. >> you have thousands of corporations, some of them are going to be poorly run and some run in a very self-interested manner by the ma

one of the most accommodative interviews i've seen with a fed official. clearly the market liked that news. also big jump in the energy sector. that leading to all the energy sectors going higher. all of the oil companies based on what is happening with oil inventories which are much lows than expected. we have a very busy hour on a very busy market day. "after the bell" starts right now. liz: get right to a very good day for the bulls. what a different day from yesterday. we have brent wilsey, wilsey asset management. why he is buying retail even though some names are swooning. we have the chief investment officer telling us why overseas is better buy and todd horowitz in the pits of the cme. todd, a fascinating move in the markets where the stock piers simply piled in as soon as those minutes came out. >> hi, liz, hi, david. certainly they were buying. basically they were buying all day and they didn't stop. they're still buying now. when we look at the big picture the russell was very weak compared to the rest of the market but apparently the dow and s&

the markets go wild, and then the fed tries to back off and the markets collapse because the fed overdidt on the way up. it was the story of early 2000. it was the early in '08. now we have another go-round where the fed has been able to push the markets up for five years now and they're trying to go back to a normal policy. they won't be able to get there and at some point the s&p and the dow are going to join the nasdaq composite on the downside. now will that be tomorrow or after another round of tapering? i don't know. i just know that the fed cannot get to zero or near there and have the markets not be disturbed. >> you've been very clear about that each time that we've had you on, bill. in terms of comparing what you see now in terms of market conditions versus the last time we spoke to you which i think was a couple months ago, are things worse now for equities? do you see this correction coming where there has to and reversion where the dow and s&p join the nasdaq or russell 2000? >> i think the exhaustion nasdaq name -- the momentum high flyers with the really insane valuations,

when the fed pulls away, what's to the market?d tepper says i'm a little nervous, time to maybe pull back. that's the general mood here. nobody's super bearish but i think there is just some concern and people just want to take a step back for a minute. >> from a technical standpoint, where do you think we need to be looking for the bottom in terms of levels to see whether this bounces back, creates buying opportunity or if we're going to have a true pullback? >> i think the 10-year treasury does have the potential to trade down to about 2.25%. . if that happens we are talking about 1,625 on the s&p 500. i don't think it necessarily happens right away. the market trades up before it trades lower but it is going to be dependent upon a lot of things. will we see this m an a activity we've seen a good portion of the year? that happens investors will eventually realize m and a activity means good things. companies won't buy another firm if they think the outlook is poor. eventually m and a activity should lead to cap x spending meanin

when do you expect to begin normalizing the size of the fed's balance sheet? is there a range of years? >> so when we complete the asset purchase program, the committee as indicated that it expects considerable -- it will be considerable time before we begin to normalize policy in the sense of beginning to raise our target for short-term interest rates. >> what range -- let's move to that. before i do, what's the appropriate size -- do you have an appropriate size for the fed's balance sheet? >> i can't give you a number that would be the appropriate size. we -- i believe the committee anticipates that our balance sheet over time will move down to substantially lower levels than it is now. whether or not it will ultimately return to precrisis levels is something that we will remain somewhat larger, something that we will determine as we gain experience with exit. one way that we are likely to turn to to normalize the size of our balance sheet, eventually, would be to cease reinvestment of principal as it comes due. the committee is not given definite guidance a

when you expect to begin normalizing the size of the fed's balance sheet. is there a range of years? >> when we complete the asset purchase program, the community expectscated that it there'll be considerable time before we begin to normalize policy in the sense of beginning to raise our target for short-term interest rates? >> let's move to that. what is the appropriate size? do you have an appropriate size? >> i can give you a number that would be the inappropriate size. i believe that committee anticipates that our balance sheet over time will move down the extension of the lower levels than it is now whether or not it will ultimately return to something levels is that we will remain and -- when way that we are likely to turn to normalizing our balance sheet eventually would be to cease reinvestment of sensible asset as it becomes due. committee is not given definite guidance at this point about when it will take this step of stopping reinvestment or principal and eventually as we come closer to realization, i expect we will get a search guidance. that to

he says the country no longer needs them. fed chair janet yellen and russian president putin move the market. putin wants to postpone the east ukraine vote on autonomy. and yellen signals the fed will remain pat with its stimulus strategy. the dow raced up 118 points the nasdaq was hit with another sell off in big tech and the s&p gained 10 points. gold fell $19 dollars and oil rallied $1.21. trader todd horwitz is here to start our trading day for us. good morning, todd. > > good morning and what's up, angie? > > well apparently it's not interest rates because janet yellen is telling congress rates will remain low, so what we do with our money, todd? > > well unfortunately you are forced and compelled to put your money into the equity market which is artificially driving this market higher. again. i'm not going to fight it but i just think that we are in very bubblish territory and as we know, the fed's track record for picking tops in market and picking bubbles is 0 out of 1 million-- they've never been right at picking the mar

which is i think when the fed looks at the market, as long as there's a two-way trade in place, they're comfortable. stocks can go down, come back up. if everything was on the way up, no matter what, you have a lousy earnings report, the stocks -- and that's the kind of thing that makes the fed nervous. i don't see that in what you're talking about. >> and that is how you categorize what's going on in 2014. all of the high-flying momentum names, the chase of the beta last year, a one-way road, very easy to do. 2014 is confusing. look at today's tape. utilities are up over 1%, right? lower yields. financials are up over 1%. doing better on higher yields. i don't think we know exactly what we're going to get at the end of the year. and i think that collectively money managers are just trying to find a safe home for money in the near term. >> you almost get the feeling, steve, that yellen and other policymakers think maybe the bubble pockets, if you want to call them, burst, that they're not overly concerned about the rest of the stock market going with it. >> so that's the litmus test, sc

the fed doesn't know how they will do it yet. when they have, to and the bond market is going to have some growing pays as they sort out how to use the new toolbox along the way but right now the big growing pain that the bond market has is there's no more sellers. everybody has sold, past tense, has sold the market already, and that's why it's been very hard for it to go down for most of the year. >> jim, we talk about bonds and how they don't seem to be worried about inflation. what about gold? a, is it still an inflation indicator and, b, if it is, why is it sitting in a three-month low right now? >> gold is a lot of things, one is that it's an inflation indicator, it vacillates on global tensions and also vacillat vacillates, i know if you don't understand the gold market, indian jewelry market, had an election and modi won and he's going to change the rules as far as importing gold and that's had something to do with it as well. a lot of facets go into the gold market. i wouldn't read this as being one about the economy or ab

the fed has been saying that in the statements.k in the right direction and that's good. >> what's your tolerance for an inflation level that runs above 2%? >> my tolerance? well, i mean, we can't control inflation precisely over a few months or a few quarters even. we have to continue to focus on what we think the long-term forecast for inflation is going to be, as well as on the economy. i think it's a danger for monetary policy making to get too wrapped up in the month to month numbers unless they really do believe it's going to be a long-term trend and that's the different -- a different challenge. >> i guess when i ask tolerance, do you believe if the fed hits 2%, if inflation hits 2%, that's the time for the fed to slam on the brakes or if it goes 2.25, or 2.5 -- >> i think you have to look at the forecast of inflation is in part. where do you think inflation is going and right now, i'm worried that as -- if inflation continues to return to our 2% target that's a good thing. but i'm worried that since monetary policy affects

he didn't get the fed chair when you hope for it. e was once again for the last time around. >> that was a question about timing at that point, not merits. >> you do want to change a fed chair in the midst of a rolling economic crisis. >> if the fed chair is deeply confident which ben bernanke is. i thought larry was excellent about this. i think he thought the president's decision was reasonable. another year at the job in the white house -- >> should he have gotten it the last time around when he was up to it? i think he didn't get it was because of a lot of the lingering anger of the lack of more punishing -- tied to wall street was one of the creek -- with the critiques from them. was the possibility of being a fed chair a casualty? >> you need a world where you live and 60 votes. 60 votes are hard to find. you cannot find them in one party. we have a political system now which is be divided in both parties. not just between the two parties. larry summers was going to lose some democrats, no doubt about it. that probably would've

the taste. there aren't a lot. there maybe some grass fed beef hot dogs but we feel that we put them all together with a special food safety edition call high- pressure processing that blows away the pathogen's for six months and gives them a long shelf life. > > well bill as you know no business is without its challenges and during the recession you had some issues paying some of your suppliers and i know it's been settled but how did you bounce back? > > well first of all i paid them all personally. we just kept going because you know the recession was one thing, the banks pulling out of giving small businesses credit lines was the most important thing and i think was responsible for the slowness in getting back on track. you just sort of study your market, study your customers, try to take advantage of developments in the workplace and it takes capital, it takes research, and just good business. > > great to have you on the show and keep us posted. > > we will. i'll send you some hot dogs. > > i would love that. thank you. still to come--

the fed, again, to get back to janet yellen. thright fashion to the fact that the fed is introducing immense distortions into our markets. she, on behalf of the federal reserve board, owns that problem. and -- and it is -- it is evasive of her not to acknowledge that plainly. >> the challenge has been issued. we'll see if she accepts it in her next public comments. >> great to see you, as always. thanks for coming by. >> zillow speaking of conditions in the u.s. housing market is the latest company to report its quarterly results and diana olick has those numbers for us. >> and it's a big beat. record quarterly revenue of 66.2 million, up 70% over the first quarter of 2013. they had record quarterly all-time traffic. another record nearly 79 million monthly unique users. earnings per share came in a gain at two cents. when you break it down in the marketplace, you had revenue of 53.4 million. real estate, 46.2. that's a record, and display up 62%. so, again, ceo of zillow, spenc spencer razcopf this was a good start. realgy and i

the fed may as well bid for the clippers. >> i think saying that the fed is not relevant is a little bit strong, but i share some of those concerns about the outlook. certainly there are concerns about what is going on abroad and in china will top to gdp -- and in china. the gdp report this morning, granted, it's the first quarter, so it is not entirely forward-looking, but we saw a slowdown in trade. that will be a drag on growth in the u.s. there are not any signs china is done with a slowdown. i think they are a slow-moving story. i'm not a doom and gloom person were think they have a hard landing, i think it will have a soft landing, but that makes it hard for the u.s. economy to accelerate and it puts the fed in a difficult position. they see inflationary pressures being quite low. they are looking at wage pressures, looking at the housing markets. those are a couple of factors that inform my views. >> fred dickson, i want to give david levy the benefit of the doubt. let's say that interest-rate s stay where they are the rest of the decade. what investments should you be in the r

>> we disagree and so do others at the fed, even the new york fed opined in giving its forecast, theff gave its forecast about what it expects. remember there's a lot of dots in the so-solid rumry of economic projections. there's participants that have a variety of views. i would think of them as betas not alphas. they're not the ones that will make -- that mean bill dudley at the end eventually and hopefully stanley fisher, and of course janet yellen, they're in charge, so don't expect that. the fed has said there will be considerable time between the end of asset purchases and the first rate hike. the fed would be going back on its promise and upset marx. what does upsetting markets means? sdrukz to economic growth. that's part of the neutral thesis, is that the fed can't move quickly or by much in terms of the fed funds rate. so don't expect a rate hike in the first quarter. >> when do you expect that first rate hike? >> the timetable looks pretty much on, especially after inflation this week seems to suggest a bottoming. call it the midyear or beyond, even toward the latter part

we better start with the fed. >> you like the fed.out yesterday was how unloved the fed needing less. after all the volatility, the vest the -- best thing they could have done was a statement of the one they put out months before. if you do a side-by-side analysis, there are subtle differences. but relatively unchanged. no change across the board agreed no press conference. if you want a press conference, -- thehe next fed meeting is one you are watching closely. >> they have the forecast attached to ask the press conference that could be like to obsess over. the changing forecast we could get. >> pmi's? it is made a. day.dy from 55.3. >> japan auto sales down. >> seven straight months. the tax hike, and the consequences of that on car sales. big issue for japan. still maintaining a 30% rally this year. even though it is down nine percent. >> interesting. thank you very much. on the move is up next. companiesowe's reported earnings earlier this morning. as john was saying, the london market is open. a number of european markets are cl

, about the second quarter of 2015, and says the fed remains on course to end its bond-buying program for quantitative ease big the end of this year if the forecast for strong growth pans out. several representatives peppered the chair with kes about whether the fed's policy of keeping interest rates so low for so long are creating financial bubbles. yellin said it's not a concern at this time. >> valuations are in historically normal ranges. now, interest rates, long-term interest rates are low, and that is one of the factors that feeds into equity market valuations. so there is that linkage. so there are pocket where is we could potentially see this valuations in smaller-cap stocks, but overall those broad metrics don't suggest that we are in obviously bubble territory. >> reporter: yellin said there could be bubbles in high-yielding corporate debt or junk bonds, but overall she said the financial system did not appear to be overleveraged. for "nightly business report," i'm lease leels. >> for more analysis, let's turn to josh fineman, chief of xwroeglobal economist at deutsch wealt

the fed is pursuing two objectives. portant to market to take account of the unemployment picture and the inflation picture. >> it is time for adam johnson's insight and action. he is following the money. >> that that may be tapering its qe bond buying program. not the rest of america. corporateking about qe. .ook what it is talking about it earlier this week, distribute in cash via buybacks and dividends. you can support stock and asset prices all growth is low. the same thing that the fed is doing. you're putting money into the system. in this case it is corporate america trying to inflate stock prices. there is a catch. he you are substituting investment in the same way the fed might be crowding out other investments. we will get into that. this is still going very strong. what we decided to do was actually the companies that are engaging in this corporate qe. and has beening working, it should continue to work. dividend yield of two percent. dividend growth of 15%. buybacks announce within the past year. all forms of