tv Street Smart Bloomberg December 18, 2013 3:00pm-5:01pm EST
become more difficult. there are concerns about effects on asset prices. although i would have to say that is another thing that future monetary economists will want to being looking at -- be looking at very carefully. our view in september, 2012 was that we had interest-rate already low and they were expected to stay low for a good long time. the economy, though, was faltering. we needed an additional boost. we needed an additional boost. we brought in the asset purchase from graham. we put a specific objective, a substantial improvement in the outlook for the labor market. our sense was once said intermediate objective was attained, once the economy had grown and was moving forward, at that point we could wind down the secondary tool, the supplementary tool, and achieve, essentially, the same amount of accommodation using interest- rate and forward guidance. i do want to reiterate that this is not intended to be a tightening.
we do not think this is an inflation problem or anything like that. on the one hand, asset purchases will continue. we will be building our asset sheet. the total amount of assets are certainly more than was expected in september, 2012, or june, 2013. we will have a substantial balance sheet that will continue to hold. now we have also clarified guidance that we will keep rates low well past unemployment of 6.5%. we are trying to get a high level of accommodation. it is true that the purchases we supplementary to the interest rate policy. again, the action today is intended to keep the level of accommodation more or less the same overall, and enough to push the economy forward. >> dow jones. in an earlier response, you laid out the argument against, or the committee did
not lower the 6.5% unemployment threshold. is that conversation over? have you put off the table changing the thresholds? has there been further discussion about perhaps adding a lower bound to the inflation target as well? specifically on inflation, what tools or actions could the committee take if inflation continues to run below your target or even falls further? >> i think we want to make an assessment now. i would not expect any changes in the very near term. we want to see how much accommodation we have, and whether it is sufficient -- whether the economy is continuing to grow and inflation is moving back toward target, as we anticipate. .ut, there are things we can do we can strengthen the guidance in various ways. while the view of the committee was the best way forward today
was in this more qualitative approach, which incorporates elements, both of the unemployment threshold and the floor, thatr, -- further strengthening would be something thats is certainly not been ruled out. of course, asset purchases, are still there to be used. we do have tools to manage a large balance sheet. we have made a lot of progress on that. again, why we think we can provide a high level of accommodation with a somewhat slower pace, but it still high pace of asset purchases and our interest-rate policy, we do have other things we can do if we need to ramp up again. that being said, we are hopeful the economy will continue to make progress, and we will begin to see the whites of the eyes of the end of the recovery, and the beginning of the more normal period of economic growth.
[indiscernible] >> some members of your staff published a paper earlier this football -- fall arguing that one high unemployment, particularly when calcifying into disengagement, there is an argument for monetary policy to be more aggressive, yet you are announcing you will do less rather than more. the fed has done that twice before and has regretted the decision. could you tell us why you are not airing on the side of doing more? >> again, we are not doing less. we will see how accommodation shapes up, but while we are slowing asset purchases a bit, again, we expect the balance sheet to be quite large and maintain at a large level for a long time. we expect to keep rates low for a very long time. we are providing a great deal of accommodation to the economy.
i agree with your observation and the observation of the paper that you cited that there is a case for being particularly aggressive, and i think we have been aggressive to try to keep the economy growing, and we are seeing progress in the labor market. so, i would dispute the idea that we are now providing a lot of accommodation to the economy. >> mr. chairman, thank you. wyatt andrews, cbs. given the billions of dollars the fed has put into the economy over the years, do you see a leading reason why the economy has not created more jobs? in -- it hase been been about a little over four years since the recovery began, 4.5 years. recovery.n a slow there are a number of reasons for that. of course, that is something for econometricians and historians
to grapple with, but a number of factors have contributed to slower growth, and include, for example, the observation that financial crises tend to disrupt the economy, affect innovation, new products, new firms. we had a big housing bust, so the construction sector has been while.epressed for a we had continuing financial disturbances in europe and elsewhere. we have had very tight, on the whole, except in 2009, very tight fiscal policy. people do not appreciate how tight fiscal policy has been. at this stage in the last recession, which was a much milder recession, state, local, and federal governments had hired 400,000 additional workers from the trough of the recession . at the same point in this in state,the change local, and federal workers is
minus 6000. -- -600,000. there is about a one million difference. there are a lot of headwinds. all of that being said, we have pace ofappointed in the growth, and we do not fully understand why. some of it might be a slower pace of underlying potential. productivity has been disappointing. there may have been bad luck, for example, the effects of the like,an crisis and the but compared to other advanced industrial countries, europe, the u.k., japan -- compared to other countries, advanced industrial countries that are recovering from crises, the u.s. recovery has been better than most. it is not been good. it has not been satisfactory. obviously we still have a labor market where it is not easy for
people to find work. a lot of people cannot get the experience and entrée into the labor market, but i think given all of the things that we face, it is, perhaps, at least in retrospect, not shocking that the recovery has been somewhat tepid. [indiscernible] >> thank you. i'm from marketwatch.com. you talked about fiscal policy, and congress is set to pass a budget deal and they have not done much to reduce the deficit. it looks like they will not do anything until after the next presidential election. could you talk a little bit about that? you have been pressing for a bigger deal and reducing the u.s. debt burden. thank you. >> well, as always, of course, i do not address fiscal actions
specifically, but i was a couple of things about this deal -- relative to where we were in september and october, it certainly is nice that there has been a bipartisan deal and it looks like it is going to pass both houses of congress. it is also, at least directionally, what i have recommended in testimony, which bit, the fiscal restraint in the next couple of years, a time where the economy needs help to finish the recovery, and in place of that, it achieves savings further out in a 10-year window. so, those things are positive things. of course, there is a lot more work to be done -- i have no doubt about that. but, it is certainly a better situation than we had in september and october, or, in january, during the fiscal cliff, for that matter.
it would be good for confidence is fiscal policy and congressional leaders worked together, even if the outcomes are small, as this one was. it is a good thing they are working cooperatively and making some progress. [indiscernible] >> chairman bernanke, i am with "american banker." as you look at the regulatory reform work, the rules that have been completed, those yet finalized, which would you have like to see tougher, and ones you would have liked to have seen finish before you leave? as someone who has been a steward of the financial crisis and the reform effort, as you leave, do you think the safeguards are in place, that the system is safer? >> the system is certainly safer, and one indication of that is the amount of capital that large banks hold. so, for example, on the capital
lide, we have imposed base three requirements, much tougher requirements for the larger banks and surcharges will be part of that. another of the main innovations that i am pleased with is the use of stress testing to see if banks have enough capital, not only to deal with normal fluctuations, but to deal with a very severe combination of a sharp downturn in the economy and very bad financial conditions. i think that has been a very important test, both of a bank's ability to survive a bad situation, but also their ability to measure their risk, which was very deficient going into the crisis. beyond that, we are looking at a leverage ratio, of course, that we expect to complete a fairly soon, the combination of having debt required at the holding
company to assist in a resolution. toare looking at capital backstop firms that rely heavily on short-term, wholesale funding . so, there is a much stronger, capital-oriented drive, at this point, to strengthen our financial system. that is just one dimension. there is liquidity and many other aspect. it is not up to me to see if they are tough enough. for you and other observers writing about this and begin about this, you obviously have your opinions, but what i would say about that is we are not done. we have some important rules to complete, although all of them are well-advanced. as we get these rules done and implement them, i am sure they will make a substantial difference in the safety of the system, the weather more needs to be done, i leave that as an open question, and i think we will be working on this for some time. [indiscernible]
>> dear cook, with bloomberg television. thank you for -- peter cook, with bloomberg television. thank you for holding this. i hope you encourage her successor to have more of them. you will be headed to capitol hill to testify, and one thing happening next year will be a full review of the federal reserve, the federal reserve act, the structure of the fed, the mission of the fed, and the mandate of the fed. i wanted to see if you might be willing to impart final words of wisdom to members of congress as they consider possible legislative changes. what, if anything, could they do to the structure, the mandate of the federal reserve, the dual mandate that might help fed policy makers in the future? do you think the dual mandate is still merited? question, you talked about the headwinds you faced through the course of your eight years. is there a decision, with the
benefit of hindsight that you would do differently -- one change in the decision-making process that you or your fellow colleagues made that would have made a difference materially over the last eight years? >> well, on the centennial review -- let me just say first that one of the things i am proud of, and i have tried to look up the show the last eight years is to increase the transparency of the fed and to increase the accountability of the fed. you mentioned the trips to capitol hill. i have testified many times, as have a number of my colleagues. there is this notion that the fed is not audited, or it has all kinds of secret books -- all of these things. as you well know, we have complete openness to the general accountability office, the gao, the government accountability
office, we have an inspector general of our own, a parting -- a private accounting firm, we publish all aspects of our operation, so we are very open, and by all means willing to work with congress to see if there is any thing that they think might be done better or in a more effective way. we are open to doing that. reviewing theose central bank will, of course, recognize that central banking is an old activity. the 17th century is when the swedish bank and the bank of england began operations. we know a lot about central banking. there are a lot of experts on central banking and monetary policy. we are not starting from scratch. there are a lot of people with a lot of expertise, and i hope
that as we talk about these issues we are bringing in serious people that understand these issues and can make good suggestions. there are a range of different mandates around the world. there are some single mandates, dual mandates, etc.. it is our sense that the dual mandate has served us well here, in particular that the fed has, been able athas, times, speed the recovery from the recession and put people back to work more quickly. we cannot do anything about long-run implement opportunities, but we can help the economy recover more quickly. i think that is valuable. i would note, by the way, that at the current moment it does not matter if we have one mandate or two because we are below our on them -- our inflation target and unemployment is above what we would like it to be, so both sides are pointing in the right
direction. retrospect, that is a very hard question. every decision you make, of course, is done in real-time with deficient information in whatever you know at the time, and whatever the experts are telling you about any particular issue. obviously, we were slow to recognize the crisis. i was slow to recognize the crisis. retrospect, it was a traditional classic crisis in a different guise -- different institutions,cial which made it for historians like me, more difficult to see. whether or not we could have prevented it or done more, that is another question. i became chairman in 2006, house prices were declining, most of the mortgages had been made, but, obviously, it would have been good to have recognize that
earlier and try to get more preventive action. we have doneid, everything we can think of, essentially, to strengthen the to monitor the financial markets, take actions to stabilize the economy and the banking system, so going forward, we are much better prepared to do with these kinds of events that we were when i became chairman in 2006. [indiscernible] >> thank you, mr. chairman. kevin hall. i want to indulge with both a local question and a broader question. as a paper that owns the south carolina papers, there is a lot of interest as to whether you will retire to south carolina and right a kiss and tell book, but do you envision a role in south carolina post- chairmanship, and a broader question, your predecessor, dr. greenspan, argues that long-term investment -- one of the reasons
we might see a slow economy -- people are afraid. companies are investing in the sorts of things that make them leaner and get by with fewer people, but expansion, we are not seeing. do you feel deficits are weighing down this sort of long- term decision-making, and doesn't argue for more drastic action in the short term -- and doesn't argue for more drastic action in the short-term? ask, do you own "the charlotte observer?" [laughter] my family now is in north carolina. my uncle still lives in dylan. he is 85 and very, very chipper. [indiscernible] ok, good. i think, for the immediate iture, my wife and i, believe, will stay in washington for a bit of time.
about investment, i think there are a lot of reasons why investment is weaker than we would like. i think the first and most important reason is recovery is slow. investment is driven by sales, the need for capacity. a slow growing, slow-growing economy, most firms do not yet feel that much pressure on their capacity to do projects. products -- there are a variety of uncertainties -- fiscal, regulatory, taxes, and so on, that no doubt affect some of these calculations. we hear that from fomc participants around the table as they report from local districts. so, i think there are a lot of factors. usually, the way you think a deficit or long-term debt would affect deficit would be through crowding out, -- investments
would be through crowding out, high interest rates. high interest rates are not our problem right now. there is plenty of credit available at lower interest rates, and we intend, of course, to try to continue to provide that to help the economy grow and stimulate investment spending. i think it is going to take faster overall growth to get firms trying to expand capacity, and, i think, if consumer spending increases as we think it will and its exports increase, as they seem to be doing, we will probably be seeing greater investment as well. [indiscernible] mr. chairman, it has been a pleasure covering you. one of the factors your policy statement says will be considered in assessing the future pace of asset purchases is the cost and efficacy of
those purchases. to what extent -- you might say cost and benefits -- to what extent has that calculation changed, to what extent did that affect today's decision, and, going forward, looking on the cost side, somebody else mentioned bubbles -- not just bubbles, but to what extent will the whole consideration of threats to the financial , asility come into play well as the potential for losses on the fed's own portfolio? question,answer your and try to do a better job on the other question as well. again, of the asset purchases as a secondary tool behind interest-rate policy, and we do think that the cost- benefit ratio, particularly as the assets on the balance sheet get large, that it moves in a
way that is less favorable. involved include, you know, managing the exit from that. it is very unlikely the fed will have losses in any comprehensive sense. we have already put me hundred $50 billion of profits back to the treasury since 2009, which is about what we delivered between 1990 and 2007 combined. so, clearly, the fed is actually making a good bit of money for the taxpayer and for the government, but it could be if interest rates rise quickly, for example, we would be in a situation of not given remittances to the treasury for a couple of years, and that would create problems, no doubt, for the fed in terms of congressional response. of how well wes
understand and can manage the affect of asset purchases. i think, for example, an important difference between asset purchases and interest rate policy is that asset purchases work by affecting what is called a term premium, which is essentially the additional part of the interest rate which investors require is competition for holding longer-term securities. we just do not understand very well what moves the term premium, and last summer we saw a jump in the term premium that was destabilizing and created a lot of stress in financial markets. so, there are a number of reasons while effective, asset less attractive tools than traditional interest- rate policy, and that is the reason why we have relied primarily on interest rates, but used asset purchases as a
supplement when we have needed it to keep forward progress. know,k that -- you obviously, there are some financial stability issues involved there. we looked at the possibility that asset purchases have led to bubble pricing in certain markets, or excessive leverage or risk-taking. we do not think that has happened to an extent which is a danger to the system except other than when those positions unwind, like we saw in the summer, they can create some bumpiness in interest-rate markets in particular. our general philosophy on financial stability issues is, where we can, we try to address it first and foremost by making sure the banking system and the financial system are as strong as possible, that banks have a lot of capital to withstand losses, for example, and by
using whatever other tools we have to try to avoid bubbles or other kinds of financial risks. that being said, i do not think you can completely ignore financial stability concerns in monetary policy because we cannot control them perfectly, and there might be situations where financial stability -- consequences for our jobless rate. i think central banks have not completely worked out how best to do with these questions. the first line for us is regulatory and other types of measures, but we do need to pay attention to other measures. i would say the asset purchase program, the last one, is well on its way to meeting our economic objective, and i'm very pleased that we are able to, over time, wind down this
program, slowing the pace of are just as because we reached -- of purchases because we reached our objectives rather than cost issues becoming important. that is not a concern at this juncture with respect to this program. [indiscernible] cnn.am with i recall in jackson hole last year you cited a study that said in first 2 trillion dollars asset purchases had boosted gdp by 3% and increase private sector employment by 2 million jobs. now your balance sheet is nearing $4 trillion, and i am wondering do you feel the third round of asset purchases packed as much bang for your buck, and d think the first that he still offered a reasonable -- do you think the first estimate offered a reasonable assessment?
>> it is very hard to know. it is an inexact science. you would have to be asking what happened in the absence of a policy. the study was on the upper end of the estimates people have gotten in a variety of studies look at the effect of asset purchases. that being said, i am comfortable with the idea that this program did, in fact, create jobs. i cited some figures. to repeat one of them, the blue- chip forecast for unemployment in this current quarter made before we began our nowhere more on the order of 7.8%, -- began our program were on the order of 7.8%, and that was before fiscal headwinds. sevenrse, we are now at percent. i am not saying asset purchases made all of that difference, but it helped to make some of the different. you can see how it works. asset purchases brought down
long-term interest rates, mortgage rates, corporate bond yields, car loan interest rates, and we have seen a response in those areas as the economy has been better. moreover, again, this has been done in the face of very tight, recovery.tight fiscal -- fiscalcy for policy for a recovery. this is something that we can continue to discuss. as i said before, the uncertainty about the impact and the effect of ending programs and so on is one of the reasons we have treated this as a supplementary tool rather than a primary tool. [indiscernible] angeleswith the los times. unemployment benefits him as you
know, are expiring shortly for more than one million -- benefits, as you know, are expiring shortly for more than one million people. and many more will see benefits and next year. do you expect that we'll have on the unemployment rate? if those people fall out of the labor force, could that not unemployment down quite a bit? >> yes. big, obvious it, it has a economic affect on those directly affected, that are receiving benefits, and we have an unusually large number of long-term unemployed people in the united states now, which is obviously a major concern and one that i cited in my opening remarks. the affect of ending extended unemployment benefits, quantitatively for the economy overall, are probably not very large because they work in two directions. on the one hand, by putting the benefits into the system, you are providing additional income. the income is spent.
people receiving the unemployment benefits tend to spend a high fraction of their income. that is a positive for growth. on the other side, some folks that can no longer qualify for unemployment benefits will just drop out of the labor force, and that will bring the unemployment rate down, but, in some sense, for the wrong reason. have arall, it could very small effect on the measured unemployment rate, but, again, i think that issue needs to be discussed more in terms of the impact on those most directly affected rather than the overall economy. >> kate, and then end on murray. o."k davidson from "politica
you talk about the centennial review of the fed, and the fed has been under scrutiny, and you talk about the fed standing up to political pressure. i wonder what advice you have given to janet yellen when it comes to given -- dealing with congress? >> excellent question. well, the first thing to agree to is that congress is our boss. the federal reserve is an independent agency within the government. it is important that we maintain our policy dependence in order to be able to make decisions without short-term political interference. at the same time, it is up to the congress to set our structure, to set our mandate, and that is entirely legitimate. we need to go and explain ourselves, explain why certain approaches are not so good, or might be better, but, obviously, they represent the public, and
they certainly have every right terms on which the federal reserve operates and so on. that being said, i think we are, in fact, an effective central bank. we are near the frontier in terms of transparency, in terms of the effectiveness of our policies, highly respected among central bankers and other policymakers around the world. i hope that when they do review the fed, if that is what they do, again, that they belie on expertise and highly qualified -- they rely on expertise and highly qualified individuals that know the ins and outs of central banking and monetary policy, which are not simple matters. it would be very interesting to have a thorough discussion of many issues involved -- at the fed has been engaged in, but, again, i hope will be on a high
level, uses the best, most qualified people, debating what changes, if yes any, are needed -- if any are needed. >> last question. >> hi. mary jacobson with "the news hour." on the question of long-term unemployment and the labor drop in participation, how much do you see that as a result of structural changes in the what extent do you think government could help alleviate that in this environment? >> i think a lot of the declines are, innticipation rate fact, demographic or structural, reflecting social logical trends . many of the changes that we are seeing now, we were also seen, to some degree, even before the
crisis, and we have a number of staffers here at the fed that have studied participation rates and the like. i think a lot of the unemployment decline that we have seen, contrary to some of what you hear, really does come from jobs as opposed to the climbing participation. that being said, there certainly is a portion of the decline in participation that is related to people dropping out of the labor force because they are discouraged, because their skills have become obsolete, because they have lost attachment to the labor force, and so on. the fed can address that to some extent, if, you know, we are able to get the economy close to full employment. some that are discouraged might find they have opportunities to rejoin the labor market. i think fundamentally training needsrkforce to fit the of the 21st century industry in the world that we have today is
the job of both the driver education -- private educational sector and the government's educational sector. we have many strengths, including outstanding universities, a we have -- but we have a lot of weaknesses, as you know. no one thing we could most directly affect is the skill level of our workforce. that does not mean that everybody has to go to get a phd. people have different needs, but that isterest, one of the biggest challenges our society faces, and if we do not address it, we will see a larger and larger number of people who are either unemployed, underemployed, or working at very low wages, which obviously is not something that we want to see. >> thank you. >> thank you.
>> you have been listening to ben bernanke, everyone. welcome to the most important hour of the session. haslong awaited taper begun. the fed is cutting its bond purchases by $10 billion a month, but promising to keep interest rates lower for even longer than previously anticipated, and the market likes it. the dow is at an all-time new high, seen triple digit gains. this, adam, is what you call the best of all worlds, for the market, anyway. >> the fed is taking us off of life support, we have begun tapering, but the fed says we will keep rates low for a long time, and the 6.5% threshold will be moved down to 6%. that is my key take away. xp pole like it, and we see that reflected not just in equities, but the bond market, and you have gold prices actually down, which is counterintuitive, but it has to do with the idea that we are tapering.
>> let's go right to the charts. let me show you three that really paint a picture of the moment. look. absolutely no doubt -- the markets and to petition how we shot up at 2:00 when we found out they are going to taper and then keep rates low for a long time. i just want to make clear we are up 252 points on the dow. our chart was wrong. there we go. that is the right chart. >> that looks better. >> let's pull up the next chart. the 10-year, that is right. 2.89%. it is up 5 ticks. that is the highest we have seen in several weeks are finally, look at gold -- weeks. finally, look at gold. three dollars $.40.
>> i was looking at the wrong gold ticker earlier. lots of positive reaction. peter cook is standing by. he was just in that news conference with the fed chairman, his last hurrah there. peter? >> a reflective ben bernanke in that room. you could get a sense that he knows the end of this term is near, and he talked a little bit about the history of the fed, but on the decision to begin tapering, he said it had nothing to do with the fact that he was about to leave, that he did not watch,is to start on his but it was hard to imagine listening to him that that was not a factor -- that he did not want to see some sort of unwinding begin as he was there. he indicated that economic conditions improved enough that they feel confident making these moves and also issuing the gorward guidance regardin
rates, but they are not going up , and with the initial reaction from the markets, it looks like they achieve the goal of convincing the markets that tapering is not tightening, this was the right time to do this, with enough improvement in the economy, but not enough. >>." can. -- peter cook. thank you. let's bring in mark zandi and very results -- very results. barry, did you see this one coming? 50% of folks said they were going to taper, and another if the percent said no -- 50% said no. >> we do not like to predict the future, but what we did notice is that a lot of people were not positioned for this sort of rally. there are still a ton of people
tapering.e, i am not sure how much of this move is we love this low- , but there is still an awful lot of professional asset managers who still do not have enough exposure to u.s. equities. >> one of the complaints, and we saw this last time around in september is the fed has not been doing enough of a job telegraphing their message. mark zandi joins us. do you think that is changing, or do you think it is peculiar that half of the investment community thought we would not see a paper today? was think their message pretty clear. on that, and it provides monetary stimulus. they effectively lowered the unemployment rate threshold for interest rate hikes, and the underively added a floor
inflation. on that, i think this was monetary stimulus, and that is why the stock market is up. there was reason to be clinical about the way they manage things back in september, but i think they have learned from that and have a grip on it now. >> is this redemption? >> at least for the moment. >> i think it is important at the chairman is nothing, if not nuanced and depth. this was both of those. clearly, he wanted to do this because he absolutely did want to do the hard blocking in front of janet yellen. i think he wanted to give her a christmas present, i'm not going to make you break the seal, we will taper, but we are not going to tighten. they could even argue they are adding more stimulus by saying the 6.5% target is not a hard target. the reason i say that, do not look at me, look at the markets.
the 10-year bond barely moved. the bond market yawned at this move. we are not seen a substantial move. >> mark zandi, the economy can handle it right now -- i am looking at your report, you say it will be a breakout year, and you seem confident about the economic signals we have on the horizon. >> i am confident. the only concern is whether the fed can manage interest rates higher consistent with the improvement in the job market. i was more nervous about that a few months ago in september, and they did not seem to be managing that well, but right now, if you are asking, given the seven percent unemployment rate, the monthly jobs gains, where would you want the 10-year bond to be, they would probably say 2 point nine percent, so they probably have it right where they want it -- 2.9%, so they probably have a right where they wanted, and as
long as they have the tools, we should be fine. one other quick point that chairman bernanke made, this theme in his comments that fiscal policy had been a significant drag on economic growth, and that drag, under current law will fade dramatically, and that mere fact alone means stronger growth next year. >> everybody stay where they are. we have the s&p at an all-time record high right now. the same thing is true on the dow, again, another record high. we will be right back with our fed roundtable after this. ♪
of unwinding its huge bond buying program to the tune of $10 billion a month. it will taper. we just heard from federal deserve chairman ben bernanke -- reserve chairman ben bernanke. peter cook was inside of the room at his last press conference. we are talking about what a monumental day this is in some ways because this is the legacy ben bernanke is leaving behind. he has begun this taper program, the unwinding of the balance sheet, something janet yellen will face, and it will be a real test for her moving forward. >> absolutely. the chairman, we know the decisions he made during the financial crisis, being credited with keeping the economy from falling into the a bass, but he will be judged on how this wind down takes place, as we'll janet yellen. they will be tied together because of this turnover. wasas striking when he
asked about whether janet yellen agreed with everything, and whether there might be any surprise in the future, that there was no separation. he wanted to make it clear there was no daylight with regards to these decisions. he consulted with her before she was nominated, then again, and she is totally on board, an important message to the markets -- you will not get a surprise from janet yellen. in earnest,y begin at a measured pace, he might have to be turned on and off, but janet yellen and i are in -- are on the same page. you almost wondered if she would walk in and that did not happen. >> interesting point. the markets are at an all-time high. what do you think investors are reacting to, steve cortes, the news that interest rates are going to stay low for the foreseeable future, or are they happy about a taper?
>> i think it is the interest rate scenario. for today, the bond market yawned at this. rates did not move. no consequential move. combined with the promise that we are going to stay low for very long -- >> does it not sometimes have a reverse economy consequence? >> i know that was almost reverential in his treatment of bernanke, ready to put a halo on him and canonize him. i am much more critical of ben bernanke. did he deal well with the crisis? a crisis he created? the stock market is soaring, but main street is not seen the growth wall street is because we do not see capital expenditures because of qe. that is difficult to connect
those dots. i can understand companies not investing because congress has not given them clarity, but what is the connection between qe, a flood of money and not investing in your company's? >> if there is not the hint that interest rates will rise, companies are not encouraged to invest. >> what is the incentive? massivewant to sit on cash positions to get zero returns. when the demand is there, when customers say we want these services, they do capital spending. when the demand is not there, they do not. that is why the automakers are doing really well as low rates have driven have -- huge auto sales and the same thing with homebuilders. >> the reason there is not enough demand is because the government has far too much control over the economy, the fiscal side and the monetary side. we are sadly following the
blueprint of japan, which does not work, high taxes, high regulation, and planning my monetary policy. animal spirits will be unleashed again.talism rise >> i have to throw aside the animal spirits argument heard you want to improve confidence, improve the underlying fundamentals. that said, where we agree is that ben bernanke did what he had to do -- not my first choice during the crisis, i would've personally put the financial entities into a repackaged bankruptcy like gm and chrysler -- >> the question is did he do it for too long? >> what is going on currently is you have a massive shortfall on the fiscal side. this is the first quarter were the states are positive. the federal government has been a huge drag on the economy. until that changes, all you have is monetary policy.
>> we have breaking news on the sac insider trading. the jury has reached a verdict, and we will go directly to su keenan. let's hear the details. >> michael steinberg, the biggest defended yet, portrayed as a right-hand man to stephen s by a jurybeen found of nine women and three men guilty on all five counts related to insider trading. this has to do with tech stocks in 2008 and the government's he received legal tips from an analyst that worked
directly below him. the government said he was part of a club of friends that share the legal tips between different funds. we should point out that his attorney tried to prove that he was trying to raise his profile at the firm and that he had no credibility. pled guilty to insider trading and was a corroborating witnesses, one of the key witnesses of 13. burke put on no witnesses and try to prove the government's case would collapse. as the jury filed in, steinberg fainted. this is something that is rarely seen. the judge sent the jury back out. she said she would call an ambulance. the attorney said he was ok, but had perhaps experienced a seizure. they spoke to a former -- i
spoke to a former prosecutor who explained it could be overwhelming. everything in life stand before you, and this prosecutor, he pointed out, has a track record of 81-0. economic had 82-0 in terms of make that -- you can 82-zero in terms of success in prosecuting these cases. >> when can we find out about the sentencing? >> we will be finding out shortly. what is significant here is this is a man who has a wife and children and could spend up to 20 years in jail. that is part of the pressure that is on steinberg. we will hear about that shortly. >> incredible pressure. steve cortes, barry ritholtz, what you make of this? >> from a broader perspective, i do not think it is something to
be proud of that a federal prosecutor is 82-0. that kind of record belongs in north korea or iran. >> but he is doing his job. >> my point is federal prosecutors are overzealous and federal laws are so broad that they could ensnare most any sophisticated businessman if the government puts his guns -- it's guns on them. >> you do not believe it is insider trading? >> i do not know the specifics of this case, but in terms of , they have spent 10 years investigating him and it has turned into a one witchhunt. >> this was -- into a witchhunt. >> as was the only guy they could get. >> you wonder what it means going forward. >> understand the sac model. cohen is trading about half of the companies money, and then he has dozens of portfolio managers that are under tremendous pressure to perform.
you have a bad month there, and you are out. you are out with a bad month. [closing bell] >> the market is up, the strongest rally we have seen since october 10. similar, same story on the s&p, new record there, all of this coming on news that the fed is beginning to taper to the tune of $10 billion per year. however, they are going to keep interest rates low for the foreseeable future. i have said this since the top of the show, it is the best of both worlds. >> if you look at some of these sectors today, there were a lot of best worlds out there. best performing was, and right behind it, the banks, up 2.4%. they are keeping it easy for the banks. by the way, the banks can still get paid 25 basis points for the excess held at the fed, which is very good for the banks.
they have been helping restructure the balance sheets as you look at the other winners. energy was up one and three quarters. consumer staples was the same. >> banks have -- banks would probably benefit from higher industry. >> remember, the differential right now between the two-year and 10 year spread? you can talk about this. the profits at banks? this is the widest it has been in love years. this is a very good time for banks. >> looking at the s&p 500 and the number of people calling and overvalued, broken down by sector, the least expensive sector in the s&p 500 is playing catch-up. holdining us right now, that thought, steve, we are getting some perspective on standout. >> i want to bring up the treasury market again. rates on the 10 year were around two point 88%. remember, we have not seen --
remember, the market really reacted more negatively back in may, when we first started talking about tapering when the rates shot up and stocks came down at that point. since then, because we have been talking about tapering for so long, we have not really seen that shoot up. >> i was say to a lot of people that a lot of people thought it was built in for spring. >> 2014? >> at this point we were up to 50-50. understand what the fed did. they are buying $10 billion less. still 75 billion dollars per month. that is a huge stimulus to keep rates relatively modest. >> and they moved the goalposts. this is no longer a hard target, they said. >> no longer a hard target, to clarify, no longer raising rates
when it drops, they said it would have to go below. >> and they did not say how far, so they have really given themselves infinite room to continue qe. i think nothing is changing. we are getting ben bernanke 2.0. a shorter, female version of an bernanke. >> come on. >> that is actually a very important point. if you look back at greenspan, he was a hero at the time but now a lot of people blame him for the asset bubble of 2008. do you think we could face a similar situation? >> i think so. the fed has proven that it is a bubble machine. i believe there is risk. not one that is cataclysmic right now, because there is not nearly as much leverage, but is this bubble territory? i think so. >> people have been calling for this for years. for two years now people have said that we will get runaway inflation and a bubble and it has not happened. all right, hold on one second,
we have some breaking news we want to get to on the nsa, the president commissioned a report it hashave it right now, been made public, reviewing u.s. surveillance programs in their youth and the recommendations are theoretically to introduce major changes in terms of how the u.s. conducts intelligence. phil mattingly is going to all of this right now. tell us, you are looking at this, what are the biggest changes that the panel is proposing as a result of this report? >> no doubt about it, these recommendations are major. they are not just scratching the surface or things on the periphery, this is cutting at the coal -- the core of what the national security agency does. this task force was put together by barack obama today. we have a look at the recommendations today that were given on friday, they include cutting back at the core of section 215, the bulk collection of u.s. phone records. they are saying a couple of
things. one, they want limits placed on how things can be collected and they do not think the u.s. government should be the people storing the data, that it should be stored by a third party or the telecoms themselves, meaning they would have to get an explicit order to query that information. about 46 recommendations here, including the prison program, which was also revealed by edward snowden. one of the key things there, if they ever pick up anything from a u.s. citizen they would immediately have to purge that. i think that is what people thought the rule was prior to the snowden disclosure, turns out that was not the case. a number of other things here about putting civilian officials on top of the nsa, splitting cyber command, things of that nature. really major reforms here, but something to keep in mind, jay carney hit on this today in his press conference, the president does not have to accept any or all of these. >> over the next several weeks
we will be reviewing the review its 46report and recommendations as we consider the path forward, including sorting through which recommendations we will implement, which might require further study, and which we will choose not to pursue. >> obviously the president leaves for vacation on friday to hawaii for the holidays and jay carney said that he expects he will take the report with him and that he will meet with advisors over the break and early into next year. at some point in january the president would give a speech announcing which of these recommendations he will take and laying out what he wants to see from congress going forward. obviously coming from edward snowden. these changes would likely not be coming were it not for the disclosures earlier this year. >> which perhaps gives any nation to those who believed he is a national hero for disclosing all of this. phil mattingly, thank you very much. a central judge came out earlier in the week saying that it was
against the fourth amendment and was in violation of the fourth amendment for the nsa to do this, do you think the nsa is going to have to change their mode of operation? >> clearly they will have to make some changes, but this report gives a lot of ammunition to the people who say that edward snowden is a whistleblower who should begin in amnesty. we would not be talking about any of this if it was up for what he did. i think that amnesty might be in the cards. >> that court ruling was a big victory for the bill of rights. my guess is some of the founding smiling, wherever they are. to put a market perspective on this? one sector that has done fabulously well our defense stocks, not just for hardware, but cybersecurity, cyber warfare, lockheed martin, northrop grumman and, i love those stocks and one of the surprises of the obama administration has been how bellicose we have been all over
ok, time for the roundup of business stories that we are tracking ahead of tomorrow's open. >> hewlett-packard, raising this year, meg whitman's annual salary is going to increase from $1 million to one point $5 million. >> know, one dollar. >> that is right, that is right, it was one dollar, but looking at her stock compensation from last year, it was more than a dollar, but bottom line her stock has gone up to one point
$5 million. just the base salary. the increase was to keep the stock competitive from various rivals. meg whitman is trying to deal with sales that have fallen. the problem is, if you look at the earnings for this year, they are down 10% and i want to put the question to the team, with earnings set to rise only 10% this year, is it worth it to up the total compensation? should you not be incentivized to make money, not lose it? >> the bottom line is, meg whitman is a billionaire, what the she need $50 million for? keep on working -- >> i don't know, she already has shares. >> to your point about shares, at the end of the day what is really going to matter? a 93% gain? that is something. >> just because the stock went up? that is all her job is. if they lose money for the rest of eternity as long as the stock keeps rising, the earnings that
the owners will be happy. >> last year they were $3.99. it went down. >> part of the problem goes back to benchmarking. ceo pay benchmarking. you say you have to remain competitive, so you look at other companies in the industry, but you do not necessarily look at their performance against the size,you look at the similar industry. there are a lot of criticisms of that model, that you are not really doing a fair pay model because you are not comparing apples to apples in many cases. >> that is true. i wrote my senior thesis on this as well. on the other hand, as long as the stock is rising, your job as ceo is to be the agent for the owner and the owner wants the stock to rise. it does not matter what you do with your balance sheet, as long as your stock is rising, everyone is happy. you want to incentivize ceos
with the owners of the company. giving them more stock as a base salary doesn't matter. >> a lot of other ceos these days are taking one dollar. whole foods, taking a dollar. larry page, surrogate brain, taking one dollar. >> not uncommon. let's talk about another well- paid ceo, jpmorgan, suing the fdic over claims tied to bad mortgages and sold by washington mutual. the bank said the agency is responsible for more than $1 billion in liabilities they faced as a result of their 2008 takeover. in the complaint filed yesterday, jpmorgan said "the indemnification obligation that is the subject of the action is a matter of contractors rama saying what the fdic made to jpmorgan to induce them to by
washington mutual assets. " the problem is that when they made the agreement, it was not very specific. in the hubbub that was happening during the financial crisis, trying to convince jpmorgan to come in and make a bid, they wrote an agreement, but most of the time it is much more specific than it was in this get dish -- this particular case. fire sale.ertainly a the regulator put a lot of pressure on jpmorgan to buy washington mutual, they did so, now they are on the line and are still in negotiations. it makes sense that they are trying to get some of the money back. the bottom line is that if they are on the book for all the liabilities of the bank they bought, where is the incentive for another anti-step in in a crisis? >> the upside, yes, they had to spend billions to buy it, but the upside is you have to take a bad with the good, you should be
liable for the losses. it is a toughie. >> it is kind of refreshing to see jpmorgan suing the government. >> my thoughts exactly. >> president obama is sending a big message to vladimir putin as a sign of u.s. concerns over human rights in russia, especially anti-gay laws, neither the obama's nor the bidens are going to attend the olympics. the first time since 2000 that the president, vice president, nor former president has been a member of the opening ceremony delegation. the delegation will instead include an openly gay athlete. how do you like this? tennis great billie jean king said -- there you go, russia. quek she is gay? >> yes, she is. >> as well as another former athlete. >> what a statement to russia. it does not work, you know? you cannot discriminate against
people. >> i cannot believe they are even having the olympics there, frankly. >> they have come under a lot of fire from a lot of different quarters. the white house says it is a scheduling issue, trying to tell the diplomatic line, not anger russia too much, while still making a firm statement about what is acceptable. >> not very firm if they are making excuses. >> the other thing the u.s. statement said when they described the delegation was the first word was diverse city. i would also say that this is of course not just about homosexuality. russia is also still giving edward snowden asylum. that is a big poke in the eye. warms are not exactly between them. >> vladimir putin has been a foreign in the president's side all year. >> it is like we are for free choice in the bedroom, but not for free speech and the media, right? dead," of "the walking
suing amc over the profits. the man who developed the profits was forced off the series, kicked out of his row as -- his role as show runner and amc,aims that the company, has deprived him of tens of millions of dollars in profits through improper and abusive which is because amc licenses and affiliate to make the show and they do not pay the affiliate enough to cover costs for making the show. so, frank would get 20% of the profits, but you cannot have 20% of the profits if the show is making a loss and amc has made sure that the most watched series in cable television history makes a loss because one point $5ensed million per episode. is it a set up? is it a setup?
you be the judge. >> clearly, frank guerra bond -- darabond, who produced the shawshankyou be the judge. >> clearly, frank guerra bond -- darabond, who produced the shawshank were -- shawshank redemption, thinks it is. am i the only one that watches this? >> even that clip was too much for me. >> companies that make their own shows in house been sued in the and, for example, by will grace, for cheating smaller companies out of profits. >> this is just market accounting. the banks got it wrong, now it looks like hollywood is doing the same. >> they are fudging, for sure. >> all right, as we prepare to -- goodbye to qe qe? >> we will never say goodbye to that. >> insight in action is next. ♪
>> chairman bernanke begins to taper as we say goodbye to qe. of thecknowledge some biggest winners. time for insight and action. here you go, balance sheets in corporate america, one of the big beneficiaries of what we have seen from qe. let me explain that. we are showing short-term debt and quite, percentage of show -- total debt, with long-term bonds in yellow, going back to 1954 u.s. companies. think about what has happened here. short-term debt has gone way down, long-term debt has gone way up. why is that good? they have been crammed down so far by the fed that as cfo you were able to go out on the curve and borrow cheap money for a wholeime, costing you a
lot less overtime. this switch from short-term to long-term, that has been a gigantic gain for corporate and it will continue to be over time as cfos are effectively able to save money and lower interest rates, right? a good thing. these are the big winners, the 115 out of the 500 companies have all of their that do after 2025. i should say that the weighted average maturity is after 2025. the question then becomes -- who of these 115 people that moved out, who have the lowest payments? here you go. here are the 14 companies that not only have the debt going out lowestgest, but at the rates. abbott labs, baker hughes. look at this, exxon mobil. debteighted cost of their is less than one percent.
we just pulled the data off the terminal. i am going to post all of these tickers on twitter. the point is, eventually rates are going to go up and when that happens, these are the companies that win the cousin a have already locked in low rates for longer. >> take you very much, adam. our closer, barry, is still with us. let's talk about qe4 a minute. -- qe for a minute. what is the biggest benefit and biggest hindrance? >> the biggest benefit has been keeping rates low. we just saw how important it has been. everyone got into trouble with short-term financing and long- term obligations during the crisis, but now you see a lot of companies -- look at the bond offering that apple had. .> we know the good stuff i know you are in the fed camp.
>> i am not quite in the fed camp. understand, the big complaint is that there is only so much the fed can do. yes, it helps industries like housing and autos. .> and now we have a mega bill >> not so much. these are dated bonds. if the fed wants, they could hold these and they will eventually rolloff. it is not like there has to be some crazy exit. the downside of qe is that the fed has affectively punished people who live on a fixed income, punished bond investors. when we have put together a portfolio that is a little u.s. stocks, a little overseas -- >> you do not worry about the interest rates moving higher before the fed can finesse their way out of it? >> the fed is not creating the debt, congress creates the debt. federaluture -- you'd deficits before they were doing qe. it got worse during the crisis, but i do not blame the fed.
♪ >> all right, time for the scene where we bring you the business behind media, entertainment, and pop culture. apple's iphone, there it is. think it is only good for pictures? think again. this is the new it audio from the and rhymes -- hit video from leeann rimes. guess what? shot entirely on an iphone, she joins us from los angeles. been a fan of you for a long
time. how did you do this thing? >> thanks, the creator of the video, we discovered his work on vine. he is amazing, what he does with his imagination and an iphone is absolutely insane. i was kind of shocked that no one had done a video like this yet. i jumped at the chance to do something with him and it was really fun. it only took 20 minutes or 30 minutes of my time, where usually a video would take days. >> in the era of reality everything, to do something that looks like this, where obviously we are looking at it right now, how do you decide to take that step? >> you look at his work. really, we just wanted to let him run with his imagination and really play off of his work. it was not about us, but at the same time it is. it was just a different way to
have fun and create something new and not do what everyone else is doing these days. i loved it. >> is this the future? we have seen a lot of change in the music industry. is this where things are going? to bebe able to share -- able to have the quality that we have with the iphone and technology, to be able to reach out to our fans immediately with videos that we post on the website or youtube, to glimpse into our world day to day or the studio, it is so easy to do things these days to create videos like this where it costs haveons of dollars, to people seeing what you are doing in the studio, that would have needed a whole crew. >> you have more awards than i can count. 12 billboard music awards, cma awards, grammys, on and on, we could keep this going, but i
want to get your take on a couple of videos. blurred lines. it took everyone by storm in the middle of the summer. it has the social media tag in it. what do you make of this? >> what do i make of it? thate not played -- paid much attention to it. mostly i saw skin. it is fascinating, obviously. social media is clearly the way that people are driving promotions these days. you have the attention of so many people on an hourly basis, it is amazing. >> it seems like the videos are getting more and more provocative. you mentioned the words skin. miley cyrus, to working, twerking,l -- wrecking ball. what is going on? >> sex sells. sex has always sold.
they are using it for what it is. they know that it sells and, obviously, they are being kind of smart about it. selling, can sex you take it too far? >> absolutely you can. some artists will always push the envelope to see how far they can take it. >> it is amazing what is happening and you are certainly part of it with the new video entirely on an iphone five. leann rimes, thank you, we will be voting for you in the next cma's. >> thank you very much. take care. bye. >> submarines, missiles, we are counting on the military's most deadly weapons, next. ♪
at a live looking shot of the floor of the u.s. senate, where they are very close to finally passing a budget. that vote is happening right now. as you know, the house passed the budget, then it went to the senate and now we are getting a final vote. it finally looks like washington is getting something done. happens, we will let you know, officially. >> according to the latest gallup polls, the president's approval rating are approaching all-time lows, the same numbers george w. bush had back when he admitted that much of the intelligence used to justify the iraqi war was faulty. 12 points higher than president nixon during watergate. out. but it is coinciding with the meteor rise with pope francis. margot joins us to discuss this phenomenon. he really seems to be changing the face of catholicism. for cafeteriaing
catholics, like me. i do not like all of it, but i went to 12 years of catholic school, so culturally i am there . he is everything you would want in a pope to many of the catholics that i know. just the way he is living, driving a ford fusion -- no, ford focus, living in an apartment, not the palace, wearing the brown shoes, ministering to the poor at night . >> practicing what you preach, right? could stand tot grab some of that, they picked up on the same subject at the same moment, income inequality. >> which is at an all-time high. >> this is a gilded age. i walk around here in new york and i cannot do -- cannot believe the wealth. >> you see so much of it at this time of year, the consumerism. this is an interesting contrast, president obama, the pope, a lot of the hope and excitement
around president obama that existed has clearly -- >> that first term excitement. >> but the pope has a similar kind of halo effect around him right now. >> exactly. the hope and change turns out to be pope francis just as it fades from the president a little bit. yes, you see it in the pope. and the pope can be so direct in his -- what would you call it, cyclical? even though it was not. saying that we can no longer let the powerful dominate the powerless. i want a church that is in the street, getting its hands dirty. the president can talk about income inequality, but you notice that when he does he tries to couch it in terms of -- actually, wealthy people, it is good for you to help the working poor, then they will buy your goods and services. he does not say it in the way that the pope does.
after the pope did his apostolic exultation, rush limbaugh is calling him a marxist. you know? obama cannot afford to be called a kenyan socialist, so he does not go that far. conservatives like the pope on social issues, conservatives embrace, usually, the catholic pope, but now he is going to talk about income inequality and he is a marxist? >> labels are unfair, attaching that label to anyone seems unfair, but to the point from rush limbaugh, he was effectively saying that if the hope was really saying that capitalism has fundamental problems and is not doing its job of helping people, that is a strong statement. >> we have to get back to a government that does more for people at the bottom and gives them that fighting chance. you have got to give them a fighting chance. there are historic levels of
income inequality. people are just in despair. every cab driver is working two shifts. might be working at the 711 when he is not. that is what we have to do to make a living wage. fast food workers demonstrating, the cousin hamburgers cost two dollars. >> in terms of solutions, you think that president obama should take a page from the book of the pope? could he be more direct? or is that leaving him to exposed? what not if you have rush limbaugh doing the marxism. >> even though it is the second term? >> eat it not do it in the first term very much. he only gave one and a half speeches that touched on this. if you read the poll numbers, there is nothing left to lose, so go for it. >> which begs the question of legacy, if there is nothing left to lose, it is hard to create a legacy. that is the president's real challenge right now. >> i think that people in the
white house think that obamacare is going to turn around and that that will be a main legacy. for everyone, not just me and you, they get to go to the doctor when they want and when our kids have a temperature of 100 and two they go straight to the doctor. people who do not have money think twice. the pope does not want people to wonder if they should be getting their strap test for their kid. >> as we approach the holiday here, this is a pope who is not just liberal in terms of his economics, but on social issues as well, which is very different from what we have previously seen. >> in that same exultation he reiterated the church view on abortion, which is that they are not in favor. what he said earlier and what he submitted was that the church should not get hung up on social issues to the point where its main gospel, its main message is not getting out. issues andgay
abortion in particular in perspective. let us not be about what you cannot do, let us be about what you can do. >> which is a very different tone. >> hope and change. >> interesting, exciting times. especially for us catholics. >> hey, fellow catholic. >> catholic school, right? >> it never goes away. >> let's get a look at what is coming up on "taking stock." >> coming up, continuing coverage following the final press conference from ben bernanke as chairman of the federal reserve, plus a little bit of fun, the chief executive of a company called plain- vanilla games. do you like trivial pursuit? you might like this next game. nmi t professor who is turning bicycles into a hybrid that can power your mobile devices while you ride.
♪ >> the senate vote is in, it looks like we get a budget deal. let's go to phil mattingly for details. >> still ongoing right now, but the senate does have the votes now to pass this budget, the first one and a couple of years, a bipartisan deal at that. what this will do, as we have seen over the last couple of weeks, is provide $63 billion in relief from the sequester cuts that were put into place.
expectations were for $180 billion in cuts, this cuts $63 billion from it, cuts made largely in fees and airline security, things of that nature. but the broader point that everyone is pointing to right now is that the time of partisan gridlock and when things are not good between republicans and democrats in the senate, they have really found some common ground here, moving the issue away as a budget issue that has been so crucial to what we have seen over the last few years, moving away from that and focusing on other things and, in the near term, nominations going forward, like janet yellen, which we should have by the end of the week. >> the encouraging thing about all of this, and i hope to see you guys as well, we finally seem to have something happening. >> working together in washington, incredible. lesson?hey learn their
>> no. >> because they did not work together and it did not play well for most of them outside texas, they will try a different approach, i think. >> i believe that 12 republicans were needed in order to get this done. as we are telling people, there were not the necessary votes. do you have a sense for how many republicans joined democrats on this? >> they had a procedural vote yesterday and were able to get enough republicans on board. right when they were going on, they had about 57 votes, clearly they were getting republican votes, which matter. is this going to be a great fall? i do not think so. everyone knows we have a debt ceiling fight coming up in a couple of months and republicans have said they want concessions, but i think it is the little things that people are looking at right now. the fact that you can take this off the table, it is just kind of a relief.
maybe it means that house republicans spend the next year talking about the health care law, but at least we are not going down to the wire and messing around with government shutdowns and things of that nature. positivity going into the holidays, this might just last until santa comes down the chimney. >> it kind of feels like the mood is changing, overall, whether it is on wall street with the rally on the day that the fed tapers or unemployment going up to three point six percent. you start connecting these dots and you feel like we are moving forward. >> it seems like the republicans got the brunt of the blame for the government shutdown down and the american public was not thrilled about it, they cannot do it again so close to christmas. >> they are doing it for 2016. some unity. night,ht, have a great everyone. see you back here tomorrow. ♪
>> it is 56 units past the hour. what a day in the markets. minutes past the hour. what a day in the markets. mortgage related securities, $5 billion in treasuries, meaning the monthly bond buying program 70 5 billion dollars, rallying strongly on this news, going long enough that the fed is able to do this, closing a new high up dirty four points. the dow jones and the nasdaq also gaining steam.
we also felt this in the treasury market as well. if we look at treasuries we see yields bumping up on the 10 year, which is not a huge gain, but the two-year is little changed. we should also mention that the senate just passed a budget bill , something that we were watching to happen imminently, which could mean that the rally tomorrow might have more legs, we will see if that is what transpires. in terms of individual stocks that we were watching closely today in the session, amc finished their first full day of trading with kim klein at the nyc. leslie picker has been following this ipo. it did price of the lowest end of the range. behinds the rationale trading at the lower end?
>> it was smart of them to price at the low end, they did see a slight boost. this is important for investors buying into ipos at the end of the year, the last thing they want to do is report returns with a vague ipo at the end of the year. pricing conservatively was helpful for the investors who bought in. as you may have noticed, this was the only one on the docket for the u.s. ipo. >> for you i know it has been very busy lately. the stock, though, was already priced at a discount, so what was behind that aspect of the pricing? >> further discounts on the low end of the range, we are looking at regal and cinemark is the peers. it has revenue growth projected better for next year than its peers, with lower profit margins. or investors buying into the company, they need to see more withh, especially
valuation so high. they need a company that is going to produce some solid returns. they need to price the discount to account for that. >> it was obviously priced at enough of a discount but it did draw people in. the people buying shares, what are they betting on? >> of the company has been doing a large capital expenditure program. >> we have been talking about that. >> plush seats, better soda machines. >> it is all about the experience. bigger cities have higher rent costs that squeeze the markets even more. raising the ticket prices, they want to bring a bigger experience for the people who come to see a movie. here, theickly offeror shares to loyalty club demand? was that under >> so different, so unique. it is just a different kind of marketing strategy for this ipo. they had an extended roadshow,
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