tv Power Lunch CNBC October 28, 2015 1:00pm-3:01pm EDT
expectations can be lower. they took off risks. >> you talked about health care earlier at the top of the show. look at how health care's performed so far, pfizer, murk. >> good stuff. we'll see you tomorrow. see all of you tomorrow as well. that does it for us. "power lunch" begins now. and, boy, scott is a lot going to happen between today and this time tomorrow. welcome, everybody, to "power lunch." along with taylor, i'm tyler mathisen. mandy has the day off. just under an hour to go until the fed's latest decision on interest rates. stocks are now higher ahead of that decision. will the language of the fed's statement make a difference? aig getting a boost and how. activist investor carl icahn taking a big stake. he is calling for a breakup. the stock up 13% on the year. he says aig is too big to
succeed. and counting down to cnbc's republican presidential debate. it is live tonight from colorado. we'll tell you where the candidates stand on fixing things like social security and medicare, plus what some small businesses would love to hear from the candidates arrayed out there in boulder. meantime, lets aez go down and check in with my friend, kayla at the nyse. kayla. >> hey, ty. the countdown to the latest fed decision is on in earnest. we will get that decision from policy makers in less than one hour's time. steve leaseman is life at the federal reserve and says the fed has some new data to think about today. steve, is it all about gearing up towards december now? >> yeah, it is. that's what all of the discussion is about. before we talk about the fed i want to talk about new data. we got some advanced trade data this morning. the deficit was better than expected. why is that important? because deficit's a big part of why we go up and down in gdp.
the third quarter gdp taking a meaningful step higher .3 of a percentage point at 1.7 with a range of 0.8 to 2.5. deutsche bank at 2.2. goldman sachs at 1.3%. the importance, you take the last two quarters and put them together and you're doing 2.7%. that's a big argument among those that want to hike rates. if we're averaging 2.7% growth why are we at zero? depending on what the statement says. i want to remind you of our cnbc fed survey where we show how split the people who responded to the survey are over whether the rate hike comes this year or it comes next year. take a look. 20 of our 41 respondents still saying that it happens in 2015. another 19, what do they say? they say it happens 2016, some even into 2017. what are the considerations today? the fed is going to have to
downgrade essentially the outlook -- the characterization of the job market as well as downgrading the consumer as well. and maybe showing a little less concern about global weakness. that important item number two there could potentially give the fed a bit of flexibility to possibly hike in december if, of course, the data cooperate. ky tyler, here's where we are. no hike today. could the fed insert language to possibly hike in december? if two things happen. first is we get a good jobs report and second is we get another good jobs report. tyler? >> all right, steve. thank you very much. let's give you a live look in now at the debate venue out of the university of colorado in boulder where at this hour some of the candidates and right now that would be governor christie of new jersey checking out the podiu podiums, doing their sound check, making sure they're comfortable with all of the
lighting and their positioning on the staining. so as several of the candidates come through this hour we'll take you back out there to boulder where tonight's debate airs on cnbc. the pregame begins at about 5:00. the debate itself live, the main event, at 8:00. oil is rallying right now despite new data that show inventories on the rise. prices rebounding now from two-month lows. let's take a look at brent crude if i can look all that far away over there. $2.61. thank you very much. ice brent crude is up $2.30. that is about a 5% gain right now. kayla? >> perhaps, ty, that's one of the reasons the market itself is moving up. stocks having a nice little rally ahead of the fed. the dow, the s&p, the nasdaq all in positive territory. the dow led there by apple. it had been up by triple digits. bob pisani joins me on the
floor. we are dangerously close to five straight weeks of gains. >> yes. we are breaking out. let me show you the s&p 500. it started around august 20th. that's when we started to get concerns about china slowing down. we are now essentially wiped out all those losses. we're about where we were just about when august 20th started here. while it's not a technical breakout, certainly psychological for the market to get back to the presume mer swoon highs. we're a ways back from may, $21.30. we have a ways. important psychological barrier. major indices, i'm pleased that the russell 2000 is up and doing well. that's been a notable laggert isn't helping out. it started strong and is fading here. let's call it 50% success on the laggert. meantime, you heard them talking about oil moving up on the inventory levels. kind of a funny move up for oil.
all of the energy names, apache, the big service names like schlumberger all reacted as oil shot up on that news. meanwhile, people ask me is there anything with revenue growth out there? i've been talking about revenues. the answer is defense stocks have. they've all had great numbers. northrop grumman had higher numbers. we had a deal to raise the debt ceiling. that's one of the reasons the defense names have been moving up, anticipation of a new deal in congress means more money for them. >> and taking away one overhang potentially from the federal reserve. >> exactly. >> we will see. thanks. tyler, over to you. >> thanks very much. less than one hour from now until the fed's decision on interest rates. what an exciting day this really is all around us. we love this stuff. when pimlico's cio scott mather spoke to us they urged the fed hike. that didn't happen. scott, welcome back to "power
lunch." we're glad to have you with us. i take it you're probably disappointed at the fed's inaction. we can get your thought. since that time a month ago, have the conditions that stayed the fed's hands then gotten better or worse? >> well, good afternoon, tyler. yeah, we think the conditions have changed substantially since the last meeting. if you look at the reasons that were cited for the fed not moving at the last meeting, it was really sort of a new found concern about the international developments, primarily concerns about growth in china, policy developments there. could that spill over into the u.s. economy. what you've seen happen since that time is things have gotten much quieter. in fact, you've seen china ease policy, both monetary and fiscal policy. concerns about uncontrolled slowdown in china have to have diminished substantially since the last meeting. then, too, if you look at financial conditions, the other reason that was cited for taking a wait and see approach and not
moving at the last meet, they've eased substantially. in fact, if you look at, for instance, our own -- pimco's own financial conditions index, we're almost back to the easiest, most stimulative point we've been all year. that's been a result of the rebound in equities and the lower borrowing costs that have developed over the last month or so. then lastly probably the other major thing that was left unsaid but that was keeping the fed from moving was concerns about the upcoming debate, the battle on the debt ceiling. would that potentially shut down the government and cause a big drag on growth? would there be even if the budget ceiling was lifted, would there be -- the debt ceiling was lifted would there be another fight about the budget and could that result in a government shutdown? just over the past few days that's changed substantially as well. that was a big negative. that's been pushed out well into 2017. we got an additional positive
surprise out of it which is we're going to have an additional stimulus as a result of this deal that's working its way through congress right now. you know, putting all of those things together we think there's a greater than 50% chance, a greater chance of a fed liftoff than the market currently prices in. >> checking those boxes, scott, is certainly important though, but in the meantime, every regional fed survey is still in contraction. we got a pretty dismal jobs picture. we heard steve liseman's number one priority are jobs and jobs. we need two reports. what about the regional manufacturing activity? that has to be a bearish sentiment? >> we know manufacturing has been under pressure not just in the u.s. but many places in the world, but that is a much smaller percent of the economy than many people appreciate. it is not what's driving underlying demand in the u.s. economy. in fact, if you strip out the inventory effects, you strip out the drag from net trade we have final demand which is very solid
in the u.s. growing closer to 3%. these impacts will fade and they'll fade pretty quickly as we head into the new year. that's one of the reasons we think the federal reserve will increasingly focus on where the economy is headed, the fact that inflation will have rebounded and we'll see signs of improving wages from this ongoing strong job growth. all of those things mean the fed should be closer to neutral rather than at an emergency policy of zero. >> one final question and answer if you might. last week i heard an investment strategist say that what this economy needs, the u.s. economy needs to really get going is an interest rate hike. do you think -- do you agree with that? does this economy need a rate hike as a sign of confidence? quickly. >> we think, yes. i mean, certainly there's a good case to be made for that. certainly there's more harm that can be done by holding policy rates at zero than there is benefit at this point. >> something i never thought i'd hear, people calling for a rate hike to get the economy going.
scott mather with pimco. kale la. >> shares of aig jumping. carl icahn taking a big stake in the insurer and saying interestingly, it might be too big to succeed. dominic chu is here with a pretty interesting spin on this story. dom? >> he says aig is undervalued. the large stake is a big one for him but he doesn't say how big it is exactly. he argues aig needs to get smaller by splitting up into three separate companies, one focused ond property casual at this, another on life insurance and one on mortgage insurance. i found that by pursuing a tax free plan for a spinoff of those assets aig can greatly enhance shareholder value. at the same time it can shed labeling itself as a systemically important institute. meaning it's subject to even more government regulation and oversight. he says the company is too big to succeed, like you said.
icahn even cited fellow hedge fund john paulsen who has argued a separation of these businesses in concert with other initiatives could get aig shares over 100 bucks apiece. that's over 60% higher than current levels. aig is the biggest commercial insurer in the u.s. and canada even though it's a shelf its former self. huge taxpayer bailout. pretax those prices were $1400 apiece compared to 60 bucks today. ceo peter hancock did respond to the letter. he said the company maintains an open dialogue with all shareholders, aig is taking important steps in simplifying itself, reducing debt. aig will reduce earnings on monday, november 2nd. >> dom, interesting developments there. thanks. social security and medicare will be among the big issues taking center stage in tonight's big republican presidential debate here on cnbc. where do the candidates stand on reforming these programs? sharon epperson joins us live from boulder with a look at where they do stand.
hi, sharon. >> hi, tyler. this is a very important issue. most of tonight's candidates agree that social security is broken, but opinions differ on exactly how to fix it. looking at jeb bush's plan, which was just revealed yesterday, he outlined a plan that encourages more participation and private savings plans. he also says that government support for small businesses should be set up by having starter flow in place for employees. he also proposes increasing the minimum benefit that they can receive for social security but reducing benefits for the wealthiest workers. that is a proposal known as means testing. it's common among many of the folks on the gop field. chris christie, lindsey graham and rick santorum have also endorsed that strategy. taking a look at where some of the other candidates stand, raising retirement age is another very popular proposal. workers used to be able to get their full retirement benefits at 65, now it's 66, 67 depending when you were born. most of the candidates though
including marco rubio, jeb bush, rand paul have called for raising the age of eligibility to 69 or 70. now the other topic that's so very important are the ones that the outliers won't really touch. some say they won't touch social security, at least not yet. carly fiorina said she won't touch social security because she wants to make sure she demonstrates to americans that the government can spend that money in a smarter way. then there is mike huckabee. he's the real outlier. he's stressing social security must remain untouched calling it a mandatory program. he favors keeping social security benefits as is and paying for the program through a broad tax on consumption. so the social security administration has forecast that its trust fund for retirement benefits will be exhausted by 2034. this is a very important topic that a lot of americans want to hear about. we're going to hear about it tonight. back to you. >> you bet we will. sharon, thanks very much. of course, cnbc's republican
debate begins tonight at 8:00 p.m. eastern, but that's not really the beginning. coverage kicks off at 5:00 with our pre-game programming. if you're not near a tv, don't worry, you can watch the debate on cnbc.com or on your ios, android, apple tv apps. sign in with your tv provider. very easy. cnbc pro users will be able to watch the live stream on cnbc.com. yeah. "meet the press" has a bingo game which i know i'll be playing. in the meantime, earnings parade is marching on. starwood hotels and norfolk southern are out. go pro after the bell. what investors need to know after all of these results. >> counting down to the latest fed decision on interest rates. we will have that for you in just about 45 minutes. you're watching cnbc, first in business worldwide. surprise!!!!!
we heard you got a job as a developer! its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away... got it on the cake. so you're going to work on a train? not on a train...on "trains"! you're not gonna develop stuff anymore? no i am... do you know what ge is? awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management.
[female announcer] dsave up to $400 on beautyrest and posturepedic.n, get interest-free financing until 2018 on tempur-pedic. plus, helpful advice from the sleep experts. don't miss mattress price wars at sleep train. it's gotten squarer. over the years. brighter. bigger. thinner. even curvier. but what's next?
for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. welcome back to "power lunch", everybody. not just a big day for the fed and the debate. norfolk, starwood hotels and josh lip ton on go pro. morgan, you go first. >> norfolk southern has earnings of 5%.
there are head winds plaguing the entire sector. you have a strong dollar, low commodity prices. ns executives saying they weighed on 2015. speaking of coal, coal's still a big business for norfolk. coal revenue fell 23% last quarter. that was thanks to plunging utility and export demand. the company is idoling 300 miles of track. it is the latest carrier to continue. norfolk southern says more trucks, rail bottlenecks kept more containers moving solely by truck rather than by train last quarter. executives expect all of this to weigh on q4 results. they expect profits to continue. >> let's move on to simon on starwood. >> starwoodstock is up 18% in just up in trading sessions. they're selling for $1.5 billion. you'll recall that starwood's
board put it up for sale six months ago. this lunchtime there are bigger fish to fry. our own david faber reports exclusively that one of the other big four launching giants could be about to make a full bid. that would be $12 billion plus a premium in both cash and shares. that's after the wall street journal revealed yesterday that three chinese players are each vying to be chosen by officials in beijing to extend, again, a full buyout offer for that company for starwood. starwood has a conference call underway about the timeshare business there. not saying anything so far. what is interesting is that during the last six months it's taken for these offers to break, investors have become more pessimistic about the lodging industry. the equities cycle has turned negative. in other words, starwood had lost more than 1/3 of its stock market valuation in advance of this news. tyler, back to you. >> getting some of it back in the past couple of days.
simon, thank you. >> josh, what are we looking for in go pro? >> well, tyler, can go pro win back the bulls? that's a question for the camera maker. that stock has dropped hard. now down more than 50% so far this year heading into the print. street expects to see eps of 29 cents on revenue. 434 million. beyond the bottom and the top investors want to know just how many cameras go pro sold in the quarter. they're looking for 1.4 million. the street focused on gross margins. expected to clock in at 34%. remember when go pro spliced it by 100%. what kind of impact will that have on margins. analysts estimating 690 million but many analysts have recently cut their estimates because that more muted expectation for how that hero four session is
performing. back to you. >> thank you very much. thanks to our reporters on earnings call this hour. kayla. >> ty, we're about 40 minutes away from the fed's latest decision on interest rates. forget the economic data. could this budget deal in the works in d.c. be the green light for the fed to begin that long-awaited rate hike? and the countdown also onto the republican presidential debate right here on cnbc. we've seen the candidates test the waters, going out on the stage looking at the lelecterns. all of that begins at 5:00 p.m. and the main event beginning at 8:00. here's what shark tank investor barbara cork ran wants to know from the candidates themselves. >> hi, i'm barbara cork koran. i'm an investor or "shark tank." who is your largest donor? what is their special interest? two, what are you willing to do about the ridiculous cost of higher education in our country?
[ male announcer ] eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they could save you in out-of-pocket medical costs. call today to request a free decision guide. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients... plus, there are no networks, and virtually no referrals needed. join the millions who have already enrolled in the only medicare supplement insurance plans endorsed by aarp... and provided by
unitedhealthcare insurance company, which has over 30 years of experience behind it. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide. today, we're seeing new technologies make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients:
to advance the future of medicine with digital, and improve the quality of lives. ♪ we've got countdowns to the debate. we've got countdowns to the fed decision. we're just minutes away. andrew parmentier says that congress may have just given janet yellen the clearance she needs for liftoff on interest rates. that's the same thing, andrew, that basically scott mather of
pimco said a few minutes ago, that one of the impediments that stayed the fed's hand in february, i.e.,, uncertainty about the budget and debt ceiling has now apparently been taken off the table. >> tyler, i think that's right. greetings from sunny colorado. the question is whether the fed will take the opportunity. i mean, they cut a two-year budget deal that takes us into march of 2017. that's a tremendous amount of clarity given the recent track record of this congress and it's certainly another opportunity as you and i spoke in september right in front of the fed, it was a great opportunity then to act and the market sold off. this last week i was in boston and new york talking to investors and they see the fed as weak and dovish and, you know, investors don't know what they don't know and what the fed is seeing that's preventing them from raising rates.
so, yeah, i think it's a huge impediment that's removed for janet yellen and company. whether or not they seize on the opportunity i'm skeptical. >> whether they do it this meeting or next meeting or not until 2015 we will find out at least in terms of october here in just about an hour's time. let's turn to the reason you're in colorado and why so much of the political world and, indeed, national attention is focused on colorado. that's the debate tonight. >> right. >> you say that the current front-runner in iowa and really nipping there to be the front-runner in many polls, ben carson could be exposed tonight. your words, because the economy and economics is not his strength. explain. >> well, i think the thing that people have to understand about donald trump and ben carson is kind of the inside baseball is that they haven't spent a lot of money. they've been really kind of benefitting from earned media, so to speak. they have no ground operations
in the states. secondly, we've talked a lot about domestic policy and thankfully cnbc is hosting a debate tonight that's going to focus on evening no, ma'am mick policy. i think it's clearly his weakest area. if he doesn't continue -- the question is how does he resonate as a nonestablishment candidate on economic issues. i think that's going to be difficult to do. >> one final quick question. you say neither carson nor trump have what you describe as the ground game which basically means the campaign infrastructure in some of the big primary states down the road, not iowa, not nuch so much. who does have that ground game? >> certainly jeb bush does. as i've talked to clients the past six plus months and certainly our tax team and policy team, we think marco rubio is the establishment
candidate. expect his numbers to go up. i think this is going to be a rubio/clinton match-up. much like obama had to do, rubio has to reach out and get somebody with really strong foreign policy chops, put them on the ticket to combat, you know, hillary clinton on some of these key international issues. >> andrew, you always make news when you're with us. that's what we love, andrew parmentier with height entities. cnbc's debate is tonight kicking off at 5:00 eastern. >> we have the fed to get through. odds of a rate hike have evaporated but the language of the fed statement could be a market mover so stay with us. "power lunch" will be right back.
its worst since 1948. former house speaker dennis hastert pleading guilty to evading banking laws not lying to the fbi as previously reported. this in a $3.5 million hush money case. he faces up to six months in prison when he is sentenced february 29th. urban outfitters says that it will end on call shifts for employees of all of its north american stores three weeks after promising to discontinue the controversial practice at its new york locations. go to cnbc.com which broke the story for more. minnesota gopher football coach jerry kill who has suffered for years with epilepsy has decided to retire immediately. he made the announcement at an emotional news conference saying he continues to have seizures and didn't want to cheat the football program that he loved so very much. we wish him all the best. that is the cnbc news update this hour. back to you, kayla. >> thank you, sue. the latest fed decision is
minutes away. joining me on the nyse floor, rich weiss. we have jamie cox joining us. managing partner at harris financial group. jamie, i'll start with you. if the fed acknowledges this budget deal as the stimulus that many in the market think it is, what does the market do? >> i don't know if the market really moves around on the fed making a decision or not making a decision on the budget deal, but i do think it moves away a lot of the uncertainty that the fed has been looking at. i don't think it makes any difference in the market. the markets will rise on their own irrespective of this budget deal. i do think it gives the fed some clearance to raise rates earlier in 2016. i think they're off the table now today and also in december. sther' going to wait and see how it goes before they do anything with rates. i don't think the market is pricing it in. i don't think they're going to go against fed futures. >> rich, there are still some risks in the market. it really depends how worrisome
you think these risks are. will the economy relapse? is manufacturing an issue. is the jobs picture going to continue improving? how do you invest given the uncertainty of how this plays out over the next few quarters? >> these are all the big risks. you don't want to be setting your investment strategy simply based on what the fed's going to do this year or next. let's face it, the economy is middling to weak. the global economy is also on tilt here. you want to reposition your equity and fixed income portfolios to get a little more down side protection. equity income portfolios as opposed to high beta pro cyclical sectors. government bonds as opposed to credit yields. you want to rein in the risks regardless of what the fed does. >> you say health care and technology have been the winner. jamie, you like financials. you might be playing in energy depending on what we see in that space over the next quarter or so. unfortunately we have to leave it there. gentleman, we appreciate it.
we have a lot of breaking news this hour. hopefully we'll get more. go to "power lunch".cnbc.com right now. ty? >> kayla, many of the top retail ceos are meeting today to discuss the latest hot trends into the crucial holiday season and the challenges that are facing retailers now. courtney reagan live in new york with a special guest. courtney? >> hi. good afternoon to you, tyler. i am here at the wwd apparel and retail ceo summit. i am joined by the ceo of land's end. thank you so much for being here with us today. >> thank you for having me. >> my first question addresses something you discussed in your last earnings release, that there were some issues with the quarter when it came to product, marketing, and a couple others. you said you were addressing them. have they improved? will they be better for the holiday season? >> we did a lot of work for the holiday season, especially on the marketing side because the product has a longer lead time.
so i did a lot but you can see it later. there is a little bit that we could adjust. i did bring to life a little bit of a way. we are starting to contain soon where for the first time, for example, we will have a video into the airlines of america and so the people of america or times square, we will give more volume in amplifying what we're doing and what we're doing really great. >> so land's end separated from sears and ipo'd about a year ago. you have a presence in sears. mr. lampert still has a large part of sears. sears itself is struggling. >> i think so, and the reason why is because, as i said to the
designer when they hire me, i am not creative in sketches but i'm very creative in business solutions so i think i have new ideas and we are discussing. we are exploring how to be more productive. we have commitment with sears so i'm pretty positive that that will be successful. >> wonderful. we will continue to watch. unfortunately we are out of time. cnbc is hosting a republican debate tonight. we have to wrap it up. thank you for joining us. >> thank you. >> tyler, back to you. dominic chu now for a market flash. >> tyler, what we're watching now is shares of maxim integr e integrated shares. the last trade was 138 eastern. they've opened again now. now 5.8%, 6%. this after bloomberg headlined saying the integrated circuit, semiconductor type company may be, again, be in talks to be acquired by texas instruments.
this, again, according to sources familiar on bloomberg headlines that texas instruments may be in talks to acquire maxim integrated products. bloomberg has updated this. may be in talks with maxim. want to call your attention to the fact that texas instruments is the biggest maker of instruments. texas instruments possibly in a deal to look at buying, again, maxim in at the greintegrated p >> so many deals in chips, chip manufacturing this week alone or the last couple. >> absolutely. counting down to the republican presidential debate right here on cnbc. tonight at 8:00 p.m. eastern time. that countdown clock takes you up to 5:00 which is when our pre-debate festivities begin. when we return, what small business wants to hear from the candidates and the sharks weigh in, too.
i'm damon john, shark tank investor. i have a question for the republicans. what are your plans to help support and grow entrepreneur ship and small businesses. in three different ways i would like you to answer this question. tax incentives, access to capital and affordable health care so they can support that great staff that supports them.
welcome back to "power lunch." case in point, guerrilla gravity. a custom mountain bike maker which has seen its business skyrocket. they make them all right there on site in colorado. let's see what the founders, matt jerafa and matt montague want to hear from the politicians tonight. gentleman, welcome to both of you. will, you call yourself elpresidente.
you call yourself the chief enginerd. if you're on the podium tonight, what would you ask donald trump? >> i'd like to see what they have in store for small business, what kind of ideas they have to help us out on the ground. >> so, will, you just maybe heard daymond john say what you would do in terms of tax incentives, what you would do in terms of access to capital and what you would do to make health kara available to small businesses. is that pretty much what concerns you? >> those are some great things. we've -- a great example would be what the city of denver has done in terms of helping us access capital, specifically cheap capital as a startup. it's really difficult to raise money and to raise affordable money and the city of denver has done a great job with that. >> what have they done? what have they done? >> they have a loan program.
they connect us with investors, with resources and with those sorts of things. so that's been tremendously useful. >> matt, i was talking to another entrepreneur yesterday who was in the craft or contract brewing business. i asked him a simple question. has government as you have gone through your startup phase, his company's about nine months or a year old, has government been more of a help or a hindrance to you, how would you answer? >> i would say we don't have much experience on -- with federal level government. ours is all based on local level government, and as will was saying, locally in denver, they've been fantastic. our office of economic development will bend over backwards. whatever you need, they'll try to get it however they can. they've been great. >> you all have been -- one of the things that drives your business or peddles your business, i should say, is your concern for the environment and your concern about climate
change, traffic and other things. i'd like to hear your thoughts, will, about how you would phrase a question in that area to the gop candidates who are some of them not exactly known for being sympathetic to people who believe in climate change. >> sure. i would love to hear their thoughts specifically in regards to alternative transportation, specifically setting our cities up for better biking access, safer biking access because that's going to really be the thing that eliminates traffic, like you said, is going to be getting fewer cars on the road, more cars off the road. that's going to be facilitating bike lanes around just more -- a more friendly environment for alternative forms of transportation and also is going to help the -- >> finish your thought. thank you for your thoughts and the chief enginerd, good luck.
cnbc's republican debate is tonight. the debate at 8:00. the coverage kicks off at 5:00 eastern time. we'll be watching all of it, ty, of course. in the meantime, we're just minutes away from the fed's latest decision on interest rates. formal -- former federal reserve vice chairman alan blinder will join us up next. innovating. td amerite and apparently, they also love stickers. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. who reads all those? he does. for all the confidence you need. td ameritrade. you got this.
it's back t-mobile's most popular family plan. get 4 lines with up to 10 gigs of 4g lte data, each. no sharing just $30 bucks a line need new phones for the family? get the samsung galaxy s6 for zero upfront, and just ten bucks a month. plus, get a samsung 4g lte tablet on us when you get a new data plan only from t-mobile.
counting down to the fed decision. alan blonder is joining us. he's professor of economics and public affairs at prince ton university. mr. blinder you joined us on "power lunch" for the september fed meeting. you said they would skip september and move in december. why do you still believe that's the case? >> well, i still think so although i must say the probability of even a december move looks a little lower than it did back in september. i still think the main reasons are they're eager to get started at some point because they want to go slowly. they don't want to wait a long time and then go in a big rush
raising rates. secondly, they've made this sort of semicommitment for a long time now to the markets and to anyone else who is listening that the first rate hike would come in 2015. december is the last chance to make good on that. >> so do you believe that if the fed waits until 2016 that all of a sudden we would have a seemingly rushed rate hike that is larger in proportion and quicker in pace? do you really believe the sooner they begin that's the only reason why this would be a gradual process? >> yeah. no, i don't believe it's pressing if it comes kind of early in 2016. so economically, macro economically the difference between moving in september of this year, which they didn't, december of this year which i still think they will or march of next year is not that great. as you start moving it further in time, the potential that you'll have to go fast starts
rising. i think the operational thing in many fed members' mind is the potential credibility if they don't, in fact, move in 2015. >> we are looking at a live picture of the stage of the cnbc republican debate in boulder, colorado. senator texas ted cruz getting a feel for the layout, walking up to the lectern. this is when they will be doing their sound checks. mr. blinder, some of the candidates in the election in the process right now have very strong feelings about the role of the federal reserve and exactly the state of the health of the economy. which candidate do you feel has the right read on what the fed's role should be? >> sorry, has the right view did you say? >> yes. the view that you agree with the most. >> i think hillary clinton by far, who's not going to be on that stage. among the people on the stage, i'm not sure i know what all
their views are. for example, i have no idea what ben carson thinks about the federal reserve. i think more than likely jeb bush, at least if he follows what his brother did while he was president, will have a reasonable view of the independence of the fed. there's been a lot of fed bashing from political quarters in recent months and years as you know. >> sure. >> it does not come from the obama administration. >> okay. >> it did not come in the bush administration. >> mr. blinder, as we await the fed decision, we have to leave it there but we always appreciate your insights on the fed and the economy. our thanks to you. my thanks to you, kayla. that will wrap it for the first hour. the fed decision coming right up. brian will pick it up. our finans are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird.
or the freedom to choose what doctor you want to see. so if you have medicare parts a and b, consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, these let you choose any doctor who accepts medicare patients. you're not stuck in a network, because there aren't any. plus, these plans help cover some of the part b medical expenses medicare doesn't pay. so why wait?
call now to request your free decision guide and find the aarp medicare supplement plan that works for you. like all medicare supplement plans, you'll be able to stay with the doctor or specialist you trust, or look for someone new - as long as they accept medicare patients. but unlike other plans, these are the only ones of their kind endorsed by aarp. rates are competitive. so call today. and learn more about choosing the doctor's you'd like to see. go long. the markets change, at t. rowe price, our disciplined investment approach remains. we ask questions here. look for risks there. and search for opportunity everywhere. global markets may be uncertain. but you can feel confident
in our investment experience... ... around the world. call a t. rowe price investment specialist, or your advisor... ...and see how we can help you find global opportunity. t. rowe price. invest with confidence. will today be the day that we get the first federal reserve interest rate hike in 9 1/2 years? we're going to find out in less than five minutes. hello, everybody. welcome to the big show. i'm brian sullivan. sarah is out. sarah eisen is in. there's a lot more going on aside from the fed. we have pea got more on oil's big move, aig, go pro and of
course your money, your vote with the big gop debate tonight right here on cnbc. but we begin with the federal reserve. and while the fed may seem like some big, complicated thing, it's actually quite simple because there are really only four possible outcomes today. we're going to list them, then we're going to ask our guests which they see happening. here they are. option one, the federal reserve hikes rates for the first time in nine years. pretty clear-cut. option two, no rate hike but the fed takes a hawkish tone but that leads people to believe a rate hike will come in december. option three, no rate hike. the statement takes a mixed or neutral tone. that would keep the fed confusion and debate going that basically keeps us going where we are now. finally, option 4. no rate hike but a dovish tone that pushes back expectations not to december but to into 2016. bob doll and david kelly with
jpmorgan funds are with us now. sarah joining us, too. bob, of those four options which do you believe is the most likely today? >> brian, i'll go with number three. look, after a month ago when there was the big drum role and all the expectation, it was the fed's chance and i don't see that they'll go now. hopefully december. >> so option three just to remind our viewers, basically no rate hike today and it's mixed to neutral. david kelly, do you agree or do you see something else happening? >> no, i think that's exactly right. i think they will admit that the labor market isn't growing quite as rapidly as they hoped. they will be very comfortable that inflation is still very low but at the same time they won't want to tang december off the table. they'll say international concerns or concerns about volatility have calmed down a bit. they'll want to say how financial conditions are a little less stressful than a week ago.
at the moment ago i think they want to leave their options open on december. >> bob, i don't see how they can signal anything hawkish when you had economic disappointments from jobs, retail sales, manufacturing. what is left as a bright spot in this recovery? housing has been lumpy. jobless claims are trending in the right direction. how can they signal they're getting ready for a rate hike in december? >> i'd say three things here. one, i think the consumer's doing a little better than you just described. employment aside from the most recent numbers have been pretty good. two, where the starting point is zero, that's been my reason among others for saying, let's get on with it. number three, we need to remember that the three weeks prior to the fed's last meeting the stock market went up 8% in three weeks, peaked the very hour of their decision and fell 7% the week after. the market was so ready. >> you know, david, i am being reminded on the twitter machine and via e-mail from smart folks
and viewers that i have left off a potential fifth option, which is negative interest rates like the swiss. is it possible the fed could go so dovish that we go negative? >> i certainly hope not. i don't think so. i think -- i still don't think they quite understand how interest rates interact with the economy with these levels. i believe based on the research that when they raise levels it will stimulate economic growth. they don't believe that but i don't think there's anything in the economy to suggest they ought to put more money into the economy at this stage. >> all right. bob and david, i want to sit tight here. let's get an update on the markets ahead of where we are. we have the dow jones industrial average up just about 121 points. maybe the market is expecting a very dovish tone. no rate hike and a push back on the expectation into 2016. the dow is up 121. euro dollar 110.80.
2.06 and change on the treasury note. oil having a big day. 45.96. we're seeing i hate this term a risk on trade where people are buying into a variety of asset classes. gold is also up 11 bucks an ounce. let's go to steve liseman with the call. >> the federal reserve keeping interest rates unchanged. keeping rates at 0 to .25% which is unchanged. the fed downplaying global economic and financial sflemts this statement. it's now saying it's monitoring global issues. before it said it was concerned about the effects that this would have on economic activity and on inflation. the fed downgraded the jobs market saying the pace of job gains has slowed while the unemployment rate held steady. no real clues about the next step other than the changes to the outlet that i'm detailing here. jeff lacker dissented in a 9-1
vote. preferring as he did the last meeting, a 25 basis point hike. key aspects of the policy statement from the last time in september remaining in place. they include reinvesting principal from its holdings, forecasting lower than normal rates even after unemployment and inflation return to normal levels and saying it's appropriate to hike, quote, once it is seeing some further improvement in the labor market and is reasonably confident that inflation will go back to the 2% level. those are the headlines. let me give you a few of the details. a slight change in how it characterizes consumer or household spending saying it's increasing at a solid rate. business investment increasing moderately. the labor market was downgraded. market based measures of inflation are slightly lower. just a little bit less concern.
ultimately they see it standing at a moderate pace with appropriate policy. the committee continues to see the risk and the labor market as nearly balanced but is monitoring economic and financial developments. as you can clearly see, that's a downgrade in the level of concern and how they put it in the last statement. >> yeah, while you were wrapping that up, actually i was looking through the statement as quickly as i can comparing it to the september statement. i'm going to go out on a limb a little bit and say this is modestly hawkish. yes, there is no interest rate change. i tell you why i say that. you reference the moderately word. this is what we're reduced to analyzing language. they talk about household spending as having increased at
a moderate rate. inflation compensation moved slightly lower. they added slightly as opposed to solid and moderate. a little bit of a push up with business investment. a little bit of a push down on inflation. perhaps the market is reading it this way. >> don't forget, don't forget, brian, that they also downgraded the job market. you're right, i pointed out those two issues about increasing household spending at a solid rate along with business spending. those have slowed recently. i think the key is to take the global developments off the boil. we had said leading up to this meeting that one of the things the fed was going to want to do was take back the possibility. create some flexibility if the data improves to hike in december. that is there to an extent but, again, the data have to be there. they can't do it the way the data is receipt night now. >> let's go down to bob pa sisa.
ultimately the market will be the determining factor. we saw that 100 points get whacked off the dow in a matter of seconds. it does appear there is some hawkish view of the statement at least. >> yeah, we were up 2083 or so on the s&p. so we've lost about ten points. a little more than half the gains have been cut off. the dow is up about 110 points. it's been coming down now. we cut almost 80 points of that on the up side. yeah, it's very subtle. i see here the economic activity expanding at a solid pace. wording before was moderate. so i would give it a very modest y up tick of the session. s&p 500 above the august 20th levels. remember the summer swoon we had, brian. we've wiped that all out. that was all on concerns of chinese growth slowing down. we're now essentially above that level, although not now as we've
lost ten points in the s&p. >> go ahead. we know, bob. we were up 121, 125 points on the dow when the fed statement came out. we're up 25 points now. we were up just 15 points a moment ago. maybe it's the computers, maybe it's the traders, maybe it's a hawkish view. no doubt that the stocks took a bit of a hit on the statement. >> sectors are down. when we put up the kbe, the bank sector will move on concerns on this. you can see the banks have moved up a little. the banks are interest rate sensitive so if they perceive interest rates going up a bit the banks will move on that. so here's a sector that has actually moved in opposition to the market, brian. obviously this is on the belief -- i think this supports the basic hawkish thesis we were just talking about that interest rates might be higher. there's still a chance that they might raise in december. i think that's why the banks are moving right now. >> take a look at the utilities. get a moment to put up the
utilities. they've been weak all through the morning as you can see. the utilities to the down side. the utilities compete to higher interest rate vehicles. moving up and often have trouble here. this, again, fits with that thesis about a slightly more -- slightly more hawkish tone. >> go ahead. i'm sorry. >> no, never apologize. let's go back to steve liseman in washington. >> yeah, i'm seeing something that maybe we missed in the first go around here. the statement says in determining whether it would be appropriate to range a target range at its next meeting, and i don't think that was in the original statement here. i'm looking back in september. >> that is an addition, steve. >> looking through that, that is a new addition right there. that's a kind of, hey, be on your toes. that's something we suggested that the fed might do trying to get back that flexibility for the december meeting. they're now saying, sarah, in determining whether or not to do it at its next meeting. the committee will -- >> i'm glad you caught that.
>> previously it said how long to maintain this target range. >> in determining how long, yeah. >> so now we're getting the new language of this next meeting. >> let's be clear it is also hedging it a bit because it talks about improvement in the labor market. it's not 100%. >> right. we said that all along, brian. >> you need two things to happen for the fed to hike rates, a good jobs report and a second good jobs report. >> all right. steve liseman that is at the very end of the statement. reminder, we are on live television trying to read this stuff and show our smiling faces to you all at the same time. let's bring in our all-star fed panel now. aneika cann, diane swan, bob dahl still with us, david kelly. aneika, i'll start with you. that last bit is the bombshell all of a sudden. the fed saying, unless things really turn down, we're likely to raise rates in december. your thoughts? >> you know, i'm not surprised. there's nothing that is
surprising in this statement. the fed is still very data dependent and when we look at where the overall economic growth is in the u.s., we clearly see that overall economic conditions have somewhat down turned. labor market conditions have been soft. the inflation level is still low. however, we still should be vigilant on the data that come out in recent months. the important part to make here is that the messaging is still very disunited. if we look at what the fed could potentially be messaging in december, janet yellen will speak two times before that meeting and so they will have an opportunity to all get on the same page and at least hear one clear message at that point. >> diane swamp, do you agree with that analysis? again, i'm looking at the back of the statement and i'm trying to understand if the fed is telling us in the way that only
the fed could. they can make the most clear language obtuse. >> very unclear. >> raise it in december unless the bottom falls out of the economic agenda game? >> i thank you very much for making it live. the key issues we did not see it was the trailing of the cats and the board of governors in terms of wages not being thrown in as a neglects precondition, accelerating competence. the important issue is the data dependence. all they need starting with the gdp report which will be weak which will be weak. they talk about the solid consumer spending. the things that we look forward to to carry us through abroad and making december live knowing that we've not corralled the cats yet, we've not corralled the views. i think it's shades of gray. it's not black and white.
hawks and dogs on the board of governors. there are people who do not want to move on the board of governors. that's very unusual to have more than one person verbalize that. there's a lot of corralling that needs to be done. i think the data that needs to come out is critical. two pivotal employment reports. the employment cost index. measures of inflation coming out. that's a lot of stuff from now to december to play off of. there has to be some background discussions on how if they do decide to go in december who discents. i don't think you want to have more than one dissent or even two dissents. i think you'll get one dissent if you raise it in december. if you get dissent, that won't be what you want to send to the markets. >> you see the biggest moves in currencies. we are getting a move and that would be a stronger u.s. dollar. the dollar index measures the doing lar against other currencies. in particular the euro is
weakening by a full percent. steve, did you want to say something? >> yeah. take a look at the two-year which is moving along with it. i wanted to point that out. a big jump in the two year. looks like, what is that, near 72 right now. >> yeah. >> what is that, about, 4, 5 points. i can't see the left-hand legend there. it certainly spiked on that as december has become now a live meeting depending on the data. >> so to me and bob dahl, i'll send it to you on the equity side, given what we're seeing in bonds and currencies, this was a bit of a surprise in that the fed wasn't more dovish and that the fed downgraded its worry -- how worried it is about international development, inserted at the next meeting in its statement and the market wasn't expecting it to be this way. >> i think you're right. probability they go in december has gone up as a result of this city set of statements. in particular, what struck my attention was reflecting back on the last statement and janet
yellen's press conference. all about things u.s. that's a big change. i agree with david, if the fed can go in december, that will be economic and equity positive. >> david, your take away and also your actionable advice to us? not just what we're talking about with the fed but do you change what you recommend to your clients because of this? >> no. i think this confirms the fed wanted to leave december open. i think the big -- the one thing i would say is consumer spending does look pretty strong here. the weakness in gdp is all about inventories and trade. the numbers of consumption are going to be very good. this labor market continues to tighten. we have very low unemployment claims. the unemployment came down in the last report. i think the labor market tightened enough. if nothing else goes wrong, they will move in december. if they do move in december that's positive for equities. >> david, and if it is positive for equities because we've pointed out many times on this program despite everybody saying
we're doomed, stocks have gone up nicely in times of rising interest rate environments, why do you think the market paired off the dow? >> what we've found in the past is when the fed begins to move the rates, the market gets a little jittery and then it moves up thereafter. what's happened is they've put december in play. that increases uncertainty. the market hates uncertainty. when we get that move in december if we do get a move in december, that's what's going to be positive. you get a lift off in rates and improvement in confidence. you get diminished uncertainty. the one thing they have not smofd uncertainty. >> those i do think that they added some clarity here with the language. diane swok, as steve is pointing out, we need to see jobs. the one thing they downgraded, the pace of job gains slowed. when does that pick up? what do the next few months look like in terms of jobs?
why did we slow so much? >> one is we slowed. we don't know if the data's correct or not, that's one issue. the economy slowed. manufacturing sector was weak. we did have some things that took a toll on job growth. if that had a gone to great lengths to lower their threshold on what they consider a good jobs number. so i'm saying 100,000 would be fine. that cap of what we've seen over the last year, that's the idea that that's all we need at this stage of the game to continue to erode the unemployment rate if the participation rate does not rise. >> that's the question. i guess that's the question, anika. we're going to find out soon enough. was the last jobs report just an anoma anomaly. was it' negative anomaly and weaker than the others and we'll go ahead and restrengthup up. what say you? >> that is the question of the hour. however, if we look at the overall momentum of the labor market, it has clearly
downshifted. it's very possible that 200,000 plus was catchup and that we're actually seeing a lower level that's far more sustainable than we've seen in recent months. now going back to diane's comment, it's a lower bar to keep the unemployment rate at par. so if it's 85100, even if you're below 200,000, you still have a labor market that has some momentum. >> i think the other important issue that we have to bring up is that they really left the wages out of the equation here. they said they have to be confident. you see the clear bias. the federal reserve has been clear. they want to get liftoff. we should want that. we should want an economy strong enough for liftoff. that would validate the reason that equities can rise. that's what we want, is the economy strong enough. i think the other part we're going to see is when they do do liftoff, we're going to see a
clear message where there is consensus on the fed. debate about timing and liftoff, no debate. no one wants to snuff out growth and raise rates. the message will be critical when they do raise rates if they're also willing to pause and see how the economy reacts. >> steve, here's my question to you because you and i have been doing this together now for a lot of years. you've been doing it longer than i have. for the last umpteenth fed meetings, the question is will the economic level be strong enough to raise rates. with today's statement have we changed the thinking from that to is the data weak enough to prevent them? >> you know, that's an excellent question, brian. in other words, is there a bias towards hiking if -- and i think part of that is incorporating what diane -- >> steve, i have to jump in for one second, buddy. i want to just -- they hear you but they see jeb bush. i don't want people to be confused. >> i don't think anybody would
be confused. >> confusing steve for jeb bush. >> there's nothing to be confusing. >> they hear your voice, they see his face. >> i'm not running for president. >> trick keetrickeration. here's jeb bush's walk through. they want to check the podium, check their line of sight, everything else. this is jeb bush doing that. all the candidates have about 15 minutes to do it. so we wanted to bring you jeb bush doing it ahead of the gop debate tonight. live coverage by the way starts at 5:00 p.m. eastern time on cnbc. back to you. i'm sorry about jumping in on you. >> i'm glad you did that so that people would not be confused that i'm jeb bush. if you'd leerk to write me in for president, that would be fine. here's the thing, brian. the debate now is what is good enough when it comes to jobs. 200,000 is probably more the anomaly. 100 to 150 is something fed officials have mentioned. one thing worth considering. this is rear-view mirror. this statement today is a tacit
admission that the fed went too far in over emphasizing global economic developments, that it made a mistake. two things, one, take it off the table for october. i think that was okay. certainly the fed felt like it had lost the flexibility to hike in december. we want to be very careful here not to overdo it. just because of what happened here today, that it's a foregone conclusion. the notion of raising the odds of a december hike where it was practically off the table, perhaps the market went too far. i'll get you the videotape of the last several days. i've said it on your show, brian, talked about it. how the fed would want to get back that flexibility. doesn't mean it's a done deal. it means watch the data. the fed wants the ability to do it. >> exactly. i agree 100%. i think that is exactly. they went too far in september. they sounded too dovish. chair yellen, you were at the
press conference. i think it's important to point out that this gives the fed back the flexibility. i still don't think their communications are where they need to be. i think we need a press conference at every single meeting. i think the fed needs to come to more of a consensus about what it's going to do. there's a whole spectrum there. >> we have to go. i don't know if they're hawks or dove. i've called the fed pigeons. they're sharpening their tallons a bit. too many people to thank. thank all of you. sarah is sticking around. let's get to dom chu for a market flash. >> markets in some way, shape, form are interpreting some of this fed news on this rate decision to be maybe a little bit more on the side of perhaps interest rates rising sometime in the near future. if you want to see where the evidence is playing out. check out what's happening with the smaller, regional banks out there. the s&p bank etf near its best levels today. if you look at charts of key bank, the region's financials, pnc bank, u.s. bank, they're all
higher towards the best levels up 2 or 3% on the heels of the fed decision. this is playing out in several places. perhaps the bank etfs and regional bank stocks. one place to watch for any kind of market interpretation of the fed statement, guys. back over to you. >> dom chu, thank you very much. on deck, more on the fed and the rather shocking announcement that maybe, just maybe a rate hike is coming in december. we say that because the fed use the the term, next meeting. a lot more to do, one stock an analysts says will more than double. the big cnbc gop debate tonight. we have a lot more to do. don't go anywhere. we're back right after this. the promise of the cloud is that every organization
has unlimited access to information, no matter where they are. the microsoft cloud gives our team the power to instantly deliver critical information to people, whenever they need it. here at accuweather, we get up to 10 billion data requests every day. the cloud allows us to scale up so we can handle that volume. we can help keep people safe; and to us that feels really good.
get interest-free financing until 2018 on tempur-pedic. plus, helpful advice from the sleep experts. don't miss mattress price wars at sleep train. ♪ sleep train ♪ your ticket to a better night's sleep ♪ let's welcome in jeff rosenberg. jeff, you know, listen, i hate it, too, but we have to focus in on these sort of nuances of language. it appears to us anyway it's a pretty hawkish read. what do you think? >> brian, i'd characterize this as halloween came early. i've used this before. when you look at the market reaction, the fed gave you good news but the stock market treated that as bad news. that's the pair a normal activity that we see in the bond markets and the stock markets whenever the fed comments on the macro outlooks. certainly this was more hawkish.
certainly that's what you see in the bond markets and certainly at least the initial reaction in unwinding the days up moves in equities is all very similar. this is the first time we've seen it in a while, pair a normal activity in the market running the wrong direction. you know, october's recovery is all because the fed was much more negative and they gave you bad news and the stock market treats bad news as good news. here we're going to have to see howell risky assets can withstand the idea that perhaps the fed's getting more confident. certainly you guys highlighted in the earlier segments and i think hit on all the key points. but the removal here of the global and international developments language, the significant downgrade there was a reversal and i think as steve highlighted in the earlier segment, that's an acknowledgment that their over emphasis on those aspects was in hindsight a mistake. the problem that they're going to face going forward and that the market faces is that nothing here in the statement addresses the issues outside of what the
fed is focused on yet what the fed has acted on in the past and that is the financial market conditions. so the impact of raising expectations, the impact that it has on the dollar, the impact that it has on commodity prices, all of those issues are going to be in front of us. those are what are going to determine markets in december. >> that was largely on this idea that they were getting time before the fed actually moves. i'm curious since we're just trying to interpret this statement, do you think what the federal reserve is trying to say here is that we're ready to raise rates in december or we're just going to leave the opg on the table so you can't blame us for not messaging it if we do go? >> i think they wanted to make sure that the market knew december was on the table. some of the decline in probabilities around december was probably worrisome to them and i think they did a good job if that was their aim to
increase the odds that december is more likely in their minds than what it was being priced into the bond market. the way they did that today with a little bit of an upgrade to the language on the economic side and more importantly changing the language on the global and international risks and significantly downgraded that certainly accomplished that. >> let's talk about what to do with all of this information, jeff. a lot of our viewers may be living off interest income from fixed income investments. i think the technical return they've got in the last few years could be described as squat. is there anything good to invest in right now relatively safe of a decent yield? >> you know, it's tough on the yield side because yields are very low. investors have to think not only about yield but also about total return. think about substituting total return opportunities and fixed income for yield opportunities. there's lots of areas in the world where interest rates are supportive to the fixed income return outlook, where interest rate policy is more clearly going to become and have to
become even more accommodative. we see a world of opportunities particularly when we look outside the u.s. you see greater clarity with policy having to be more accommodative. while yields are low there, the prospect for lower interest rates raises the prospects of positive total returns. that's areas first and foremost in europe, south korea to name a few. global bond opportunities here is really the place to think about for fixed income investing. >> all right. jeff rosenberg, thank you very much, jeff. it was a pleasure. see you again. >> let's get a check on the markets. up 120 points before the fed. the dow losing stream. up 36 points now. the markets, everybody consulting the source, dictionaries. what is another word for thesaurus. coming up next, the next big thing. what stocks want to see before they go higher. stick around be.
brian. a very strong rebound in crude oil prices. after steep selling pressure monday and tuesday, i will say this caught some traders off guard. the range low, session 4306, session high 4601. the inventory data even though we got a build, that is being explained away by seasonality. traders were watching the fed. no rate hike increase. maybe we'll send equities higher. keep that dollar lower even though that may not be the reaction we'll see. longer term. crude prices rebounding. near $46 here, very significant move today. back to you. >> fed wednesday, jacquie, thank you. let's talk more about equities. you're probably listening to all of this stuff, folks, what do i do? capital markets joining us. he's sticking by his 22.50 call on the s&p 500. brian, when we had you on last, i'm going to give you credit, that target price you had looked way out of touch.
suddenly we've got this 10% run in the s&p over the better part of a month. you're within sniffing distance of your target. i mean, do you have a message for the haters? >> well, first off, we're very humbled by those comments. thank you for your comments. >> you're way too nice. you've been in canada too long. >> let me give you the obligatory canadian apology. we think we have fundamental discipline and process. many of the people that do what i do have either become very macro or very kwu ant. they miss the forest through the trees. we have the very good fortune to manage money on the side for our clients at the bmo. we look at stocks. the faster, the faster we get back to the circle of life of investing, which is stocks lead earnings, earnings lead the economy, the economy helps the interest rates go up. when we start to see all of that
positively correlated again, then we can start to feel better about not being in momentum laidened, monetary based decision making entity with respect to investing. again, we think the fed should have raised rates last time. clearly they won't raise rates now. that would have been a mistake. they admitted they should have done it last time. whether december is on the table, that's moot. the trend is longer term. stocks are improving and that's what we should be focusing on. >> want to show you what's happening in boulder, colorado. the cnbc debate is happening. there's governor mike huckabee getting a tour of the stage. all the candidates are coming in and having a walk through, getting shown their lecterns and how it's all going to work tonight. >> those are some of our colleagues next to the governor huckabee, by the way. they've been busting their butts. they should get a shout out. >> isn't it a beautiful set? it looks like governor huckabee feels very comfortable. brian belsky, good sign that
equities are staying positive with the jump in the dollar and treasury yields? >> yeah, because at the end of the day remember this is all about the economy improving. we have to get back to kind of again the circle of life and investing. the dollar is not as big of a deterrent. it went down in august because people were worried about a dollar and europe and asia imploding. a lot of those things are beginning to dissipate. let's hope that calmer heads prevail, sarah. we start to invest on a fundamental basis. if we're doing that, that means u.s. stocks are going higher. >> brian, a real good things to have you on. more breaking news. nothing do do with the fed. >> the house republican conference has made it official. nominated paul ryan to be the next speaker of the house. we're told there are 200 votes,
43 votes going to his only real opponent, representative dan webster of florida. so now that will set the table for later on this afternoon. the full house voting on the budget deal going forward and then tomorrow, of course, the full house will vote on ryan to be the next speaker but obviously with republicans and the majority that becomes essentially ceremonial. so anyway, paul ryan looks to be the next speaker of the house of representativ representatives. stay tuned. hamilton pearson, thank you very much. "power lunch" taking a break. don't go anywhere. busy day. you pay your car insurance
premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deductible at all. sign up to immediately lower your deductible by $100. and keep lowering it $100 annually, until it's gone. then continue to earn that $100 every year. there's no limit to how much you can earn and this savings applies to every vehicle on your policy. call to learn more. switch to liberty mutual and you could save up to $509. call liberty mutual for a free quote today at see car insurance in a whole new light.
thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. hello, everyone. i'm sue herera. goldman sachs will pay $50 million to the new york state department of financial services to settle charges that a goldman employee schemed to steal confidential information for a client. nigeria's military said it rescued more than 300 captives who were being held by the boko haram militant group. it released photos showing some of the captives and military equipment and weapons that were
seized. nasa astronaut scott kelly taking his first space walk just hours after breaking the american record for the longest stay in space. the current record is 215 days. he is the identical twin of retired astronaut mark kelly who was married to gabriel giffords. a choking hazard has prompted the recall of several thousand ride on toys from targets. the peanuts flying ace ride on toys intended for children between the age of 1 and 2 years old but the blue hub caps on the wheels can detach and that poses a choking hazard. that's your cnbc news update this hour. we'll go back to you, brian. >> sue, thank you very much. let us trade the fed's statement with the trading nation team, and that team today, boris schlosberg, a ari wald. boris, let's assume the language the next thing means december, early 2016. regardless, they're telling us a fed rate hike is going to
happen. does this automatically mean we should sell the dollar, buy the dollar. >> definitely bullish. dollar is reacting positively. euro is down to 109. bullish dollar. >> how bullish could we have? i just want you to know this. i have called this for six of the last seven years and am wrong every time. are we going to get euro dollar parity at some point in 2016? >> only if this is not a one and done shot which i'm afraid it very well may be for now. i feel this was a political than economic decision. they have been under massive pressure to get off the zero standard even though the fundamentals in my opinion don't justify it. we don't have run away wage inflation. we don't have inflation and the economy is muddling on through. until the economy picks up pace it's going to be a one and done situation in which case the dollar will rally but at a very steady pace. it's not going to be a run away rally. >> looks like we'll have
multiple rate hikes. ari, the stock market tends to look at rate hikes. what did you find? >> i found that markets don't have -- tends not to be bad for the markets. >> doesn't kill them, does it? >> don't fear the first rate hike. we looked at all the interest rate cycles since 1955, the key word is opportunities are presented. maybe a mid cycle correction if you look at all of the dates. none of them really coincided with the major top in the market. i agree with boris's point. i think the dollar is in a secular advance. i think that continues to work. the theme we like, big cap growth. i think that's a secular trend. that's where you want to be invested in the market. >> probably better than small cap stagnation. large cap growth is where it's at. boris, you like the dollar kind of. we got it. thank you. for more trading nation enter our website trading nation.cnbc.com. so what does the fed do next? what should we read into all of this? should we read into all of this
let's get more reaction from the fed response. we've been sort of ripping our hair out here trying to interpret this language. you know fed thinking as well as anybody. when they say whether or not we may raise rates at the next meeting will be determinant on data, are they telling us unless things go to pot that they are going to raise rates or just kind of letting us know, hey, guys, we could still raise rates maybe? >> i put it this way, brian. good afternoon to you. i came into this meeting mainly waiting to see whether they might actually take a december
liftoff off the table for december, but they definitely didn't do that. in fact, i think they moved it to the center of the table. these language changes may seem small to people who don't follow the fed closely, but they're clearly strong changes. i think the committee knows that it's sending a signal by making these changes. so i think you have to think that the odds of december increase are a good bit higher than before the meeting. that said, let me just briefly add quickly that there's still a ways to go before we get to that meeting. you still have two labor market reports, a lot of other economic data. you can certainly paint a scenario where there would not be a liftoff in december. seems to me the odds are clearly higher now than they were a couple of hours ago. >> clearly you have to take this federal reserve decision and possible action, whether it's later in the year or next year, in the context of what's happening around the globe, which we know the fed is watching. in fact, in the statement they
downgraded just how worried they were about global economic developments. but we have the european central bank and the people's bank of china, both in easing mode. both hinting at more action. can the fed really raise rates in an environment like that. is what they're telling us they don't mind the policy divergence and they can deal with the stronger dollar? >> sarah, i think the main focus for the committee and for the fed is always on domestic conditions. but that doesn't -- and even though they downgraded the international considerations in the statement, that doesn't mean they're not aware of them as you point out and certainly if there's any additional economic turmoil or uncertainty, any major changes in the inflation outlook either in developed countries or emerging markets, those are things that the fed could react to. that could keep them from moving in december. again, i think the key focus is going to be on what's happening domestically. >> it's this idea of perfection. i think we first interviewed on
television 1999. >> i think that's about right. >> yeah, it's about right. i'm trying to think back. that was 16 years ago. has there ever been a time of perfection? has there ever been a time where there wasn't volatility? do you think the fed is too tiptoe, too looking for perfection? >> no, you're right. there's always volatility, there's always uncertainty. i guess there is an up and down cycle, brian, in maybe the sensitivity of the fed to particular ongoing developments and data. probably the sensitivity may be a little on the high side now related to longer term history, but i don't think it's -- i don't think this is unusual. >> al, it was a real pleasure to get you back on, sir. we'll see you again. take care. >> thank you. >> thank you. well, tonight's republican presidential debate. the two men in the middle are the leaders in the polls, that is mr. donald trump and dr. ben carson. they may also be the unlikeliest
candidates of all. eam eamon javers has that story. >> they'll be physically right at the center of stage at the two lecterns. i was up on stage a little while ago. those lecterns are pretty close to one another. the expectation going into tonight is that trump and carson might really go at each other in terms of the rhetoric, but they are physically going to be really right in each other's face. and all the candidates are now down on the stage at some point during the afternoon familiarizing themselves with just what they're going to be seeing and hearing at those lecterns. you just saw marco rubio down there getting a feel for where the cameras are, where the moderators are going to be, what his microphone situation is. all of that matters for the candidates as they get themselves comfortable with the physical space that they're going to have to operate in tonight. then, of course, a lot of it is the head games between each candidate and all the other opponents on the stage.
should be fun watching some of the gamesmanship going on. >> you do not anticipate they will physically evolve into physical grappling. >> i do not an tis si to see is donald trump feeling very threatened right now. he's slipping at least one national poll into second place behind dr. ben carson. you'll feel carson feeling some heat from the frontrunner. this is beginning to be the most national exposure. you get a lot more scrutiny when you're the frontrunner than you do when you're trailing in the back of the pack. >> you have a long night ahead, buddy. thank you very much. >> you bet. >> just a reminder. watching all the candidates walk through, the way this works, folks, is basically they get to come out. you can see they're not in ties or semicasual. that's casual for a politician. no makeup. they want to look around. get the lay of the land. they all get ten to 15 minutes to do this. adjust the height of the lectern
if they want. sort of just get the feel. this is a big night for a lot of these folks. the idea is that maybe, just maybe some of these folks do not make it through to the next debate, if they do not perform well here. reports that some of these candidates could be low on funds. maybe they're not having the ground support, so very, very important. we are just a few hours from the republican presidential debate. that is right here on cnbc. our full coverage begins at 5:00 p.m. you've got the sort of preliminary debate with four candidates at 6:00. the main event debate starts at 8:00 p.m. two minutes is when we're back. right after this.
big reaction to the federal reserve. the dollar is surging. up almost a full percent. the euro getting hammered on the news below 110. strong dollar on fed hints that it could raise interest rates. we're seeing the dow jones climbing back. certainly off the highs of the day. but also off the lows of the day. briefly going negative after the statement. when we come back, 30% this
year, and it just got a big upgrade. how high can it go? "street talk" is next. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world. romantic moments can happen spontaneously, so why pause to take a pill? and why stop what you're doing to find a bathroom? with cialis for daily use, you don't have to plan around either. it's the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions
and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. why pause the moment? ask your doctor about cialis for daily use. for a free 30-tablet trial go to cialis.com ahh... steve, other than making me move stuff, ces. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information
for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. you wouldn't take medicine without checking the side effects. hey honey. huh. the good news is my hypertension is gone. so why would you invest without checking brokercheck? check your broker with brokercheck. let's dig in right now. five stocks. first up. earnings, also drexel hamilton upgrading. a recent win and a long-range bomber deal. also, the expected budget deal in d.c. they got a $211 target. about 14% upside.
that new contract can be worth as much as $80 billion. let's also take a look at grub hub. susquehanna downgrading to neutral. saying the decelebrating growth, continuing to tap potential near-term upside. the price target slashed to $25 from 44. >> if something changes, you'll have to see more analysts cut their targets as well. stock three, masco. barkleys. upgrading this. about 25% upside. the analyst says six months after the company showed off its foonl pl financial plans. also apparently the cabinet business going well. the analyst says the ceo has been given a credibility as a change agent. >> the stocks are already up 50% in the last 12 months. next up here,
massachusetts-based cloud service company, shares are falling 18% on that forecast. that fell short. this is the biggest drop since 2009. downgrading to hold from buy. cutting the price target from 65, to 75. the stock down about 17%. >> 23 analysts. the average target is $72.5. the final stock, as always, the under the radar name of the day. viad. if you go to some big conference, they manage the exhibition spaces. b. riley starting coverage. >> pretty interesting. >> you did not get a schmidt name from me like you did last
time. >> not this again. >> not this again. >> quick check on the currencies, sarah? >> sure. the dollar, that's where the action is. it is surging. what's interesting is that stocks are climbing back off the lows. even though you do have the dollar stronger and treasure yields higher, signaling that the fed is very much putting this number on the table. >> all right, thank you. "closing bell" starts right now. we do welcome you to "closing bell" for this wednesday. very busy day. i'm bill griffeth at the new york stock exchange. >> i'm kelly evans out here in boulder, colorado. we are just two hours away from our coverage of the gop debate here on cnbc. we've got plenty on the candidates coming up. and how their plans could impact your money. >> a selloff in stocks early on. oil has staged a