tv Fast Money Halftime Report CNBC December 12, 2012 12:00pm-1:00pm EST
be sure to tune into hotel, behind the closed doors at marriott, premieres tonight at 9:00 p.m./8:00 pacific. if you've ever stayed in a hotel, you want to know what scott found out. time to get into the halftime report. back at hq. see you tomorrow. >> appreciate that very much, carl. thanks so much. welcome to a special edition of "the halftime show." the final fed decision of the year is less than 30 minutes away. we'll bring you all of the market action and analysis with a big lineup of guests, including bill gross of pimco, charles reinhardt of morgan stanley, and professor susan
wachter of the wharton school. we have mostly green on the street. modest gains for the dow jones industrial average. there is the s&p 500 in positive territory today as well. positive financials leading the way. tech a bit of a drag. speaking of tech, apple's next big bite. new reports suggest it's working on a tv. what's it mean for a stock that's suddenly been struggling. saving face. facebook is up 10 of the past 12 days. now as it joins the nasdaq 100, should you own it? one stock, two strong opinions as we debate it. first, our top story, fed watch. the markets are facing key questions today. more stimulus for stocks on the way. what happens if it it's not. our traders for the hour, pete na jarian. pete, what's the fed going to deliver, and what's it mean for the markets? >> everybody's focus, they're looking at the fed, but most of us know what the fed is likely going to do, which is going to be maybe they extend this buying
they've been doing and help out some of the mortgage markets in that regard. i don't expect a huge, big storyline to come out of the fed today. i think everybody's focus continues to be on the cliff. we all know it. we've all been much waiwatching. obviously, this has been a news driven market. it depends on who's speaking and what they're talking about. you look at the volatility index, that says it all. we're in that area, 15 to 16. and then you look over the financials. they've been the backbone of this rally. today they rally nicely. i'm looking at the financials. if we get anything positive from the fed or start to get anything more positive coming about what kind of conversations are going about the cliff, i think the financials do have plenty of upside. >> take a look at where we stand now. dow has been up five straight days. hasn't had a run like that since march. we're working on sixth day in a row. where do you see the market? >> the market is half full. companies coming out reporting good earnings, but lowering
guidance, such as jawing, and the stock pops. you have boehner come out, reid come out, cantor come out, and they're all somewhat measured, if not negative, on the result of the fiscal cliff. so the market's clearly building in a deal. if i were bernanke, here's what i'm thinking. i'm thinking, if i get the grand bargain, i don't have to do anything additional to what i'm doing now because the economy is going to explode fwr trom the pent-up corporate spending. if i wait, let them take care of it. that's unlikely, though. i think the fed is in a holding pattern and let the market bounce around without the upside gains. >> is that it, or are you just getting warmed up? >> let's go to murph. >> if you don't get anything from bernanke today, the market is going to sell off. if we see bernanke step away from the easing today, we're going to go a lot lower on the mark
market. i don't think that's going to happen. i think you'll see him extend and see what happens with the fiscal cliff. >> what does the market want to hear from the fed today. jim is chief financial strategist for wells capital management. thanks for coming back. >> thanks for having me. >> what does the market need to hear today? >> well, i think the market is priced right now for the fed to eliminate ot and replace it with qe4 about the same size going forward. i think, if it's different from that, it would have a short-term reaction. that's no doubt. if they just eliminate ot and don't announce anything new, i agree there will be a knee jerk selloff over time. i personally think that i would like to see the fed lean a little more towards giving some credence, if there is a fiscal cliff agreement here, that the economy is getting better and maybe doesn't need as much liquidity. i think a fed that maybe didn't
do as much today, maybe did a little less than the market expected, might create a short-term negative but would create a longer term positive as confidence would build, and the feds are more confident in the sustainability of the cycle. >> jim, you're saying the market is not ready yet to stand on its own. >> i think it is. i think the fed and others are too scared to let it. i think both the economy and the market are ready to stand on their own. look as we enter 2014. there's good odds. you can make step forward on progress of fiscal issues. we will have calmed eurozone fears, revived china and an emerging world. gear u.s. recovery, which is operating on far more cylinders. housing activity. bank lending. falling unemployment rate. and finally, we would have restored a lot of debt balance sheet. that's a lot of positive force for the economy in 2013. i don't think it needs more fed
involvement. >> likely to get something, though. i think we can both agree on that. what about the cliff? >> i think the cliff -- i think it's going to sound ugly and mean because that's the way you negotiate right up until the end of the year. i think we're going to get a modest tax hike, modest spending cut, and extend a lot of the existing relationships to live to fight for another day. >> jim, stick around as we kick it around with the traders. financials, that's what jim likes. >> i think the market is playing a game of three-card monty right now. you have the fed on one side, fiscal cliff in the middle, and i think earnings is actually where the coin is. that's where the prize is. i think the market is vulnerable because it reminds me of 2007. earnings struggled the second half of the year. against that, you have macro
easing from the fed. going to the december 2007 meeting, you actually had them cut rates. and after that, the market had a real tough time. >> jim, what do you think about the three-card monty theory? >> i don't really think that earnings is the driving force. i think we've produced much of the earnings for the cycle. we're at new all time highs. the i think earnings will rise a little more. the big key driving force is rising ornaments. over 10% of the gain is because the earnings multiple goes to 13 1/2 now. that's 10% of the gain this year. and rising pes is all about rising confidence. i think, if we agree this is more of a sustainable recovery, then confidence will either continue to rise, and so will valuatio valuations. so we need to have some earnings, but the big driving force, i think, is shifting towards rising valuations on better confidence.
>> jim, we'll see what the fed delivers in a matter of moments here. thanks for coming on. we'll talk to you again soon. >> thanks so much. >> jim paul seisen for us. let's take financials as a group. are you guys in agreement that the financials are going to be the place to be in 2013? >> i am. i'm a part of that. bank of america, jp morgan, wells fargo. look what's performing today. look at the xlf once it got above the day. to jim's point about emerging markets with industrials. why not get something that holds both like a ge? i don't think it's a sexy name where everyone says, wow, it's going to explode to the upside. you get yourself in yield. get yourself a company with exposure in the latin markets, particularly latin america and china. i stay away from the actual emerging market names themselves. >> financials are good because if rates do go up and the economy does get better, they'll be able to make money off the net interest margins, finally on
the yield curve. if you don't, you've got stocks, despite the move, that are cheap relative to historic. >> let's get to apple. is that company one step closer to making itv a reality? the company is testing designs for a television set with several asian suppliers. >> i think apple is still a show me story for next earnings. again, momentum has been lost because the company hasn't been able to deliver for two straight quarters. i think the new product cycle should help them. but margins is going to be very important as the ipad mini starts to take over market share from the other products. i think next earnings is what you want to wait for. i wouldn't buy it here. i'm on a hold. >> do you guys need to see what this tv is going to be? is that the next catalyst, this next category, if you will, for apple? that's something that melanovic over at u.p.s. mentions. put a little in the stock.
>> of course, we want apple to succeed. you look in the past when the ipod, the ipad, the iphone came out, these have all been category killers. you have to side with apple here that they're going to continue. there's so much pent-up demand for the itv that, when they roll it out, it's going to be massive. i'm a holder of the stock. we add to the position. i think apple has just gotten out of favor due to tax selling, and i think the stock is going to rally here. >> i think the itv is going to be a big deal. i don't think it's a tradeable story yet. it's something six months from now could offer a 10%, 20% rally. let's go to the market flash desk and take a look the awhat's moving. mar mary thompson is seeing something. >> we're looking at the company that operates red box, and it signed a deal with verizon ten months ago. next month they start an online video streaming service to compete with netflix that will
go for $8 a month, pretty much in line with what netflix charges. coinstar shares up 3%. take a look at netflix. obviously, this is isn't bothering -- the anticipated launch isn't bothering shareholders today. morgan stanley also raised its price target on the stock to $105 from $80. >> a person sitting at home today and looks at the charts, hm, should i buy coinstar or netflix? >> i tend to like netflix. i was on the fence the other day, but now that i've seen the storyline, i'm looking for someone to enlighten us. morgan stanley, this analyst has been dead on. since the stock was 50 and up to 250 and now back at these levels. another reason i think it's worth following and listening alo along. you talk about content. he's one of the few guys who didn't talk about overpaying for content. he likes the content they've been able to acquire. the disney deal looks like it could be something in the future. i like netflix. >> coming up, the last fed decision of the year and the
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and no fee to activate you can load cash and checks at any chase depositfriendly atm and there are no withdrawal fees at over 17,500 chase atms all for one flat fee of $4.95 per month. get rid of prepaid problems. get chase liquid. welcome to our final fed decision of 2012. this could be a biggy. it is not only the last one of the year. it's the last one before the u.s. economy can go right over the fiscal cliff. and the $600 billion question. will the fed, does the fed have the fiscal fire power to offset tax hikes and spending cuts and keep the economy alive? it is a good question. we do expect the fed to keep interest rates near zero at
least near 2015 and also continue to buy agency backed at the pace of $4 billion per month. a big change is the end of so-called operation twist and the potential start of what some are calling qe4. there are some big questions. do we expect some answers in about 5 minutes? let's hope. but we may not have to wait. we've got our own fed insider steve liesman here. he is in washington, where he himself scaled the georgian columns of the fed building. he is here with a preview. steve, what can we expect from the final fed decision of 2012? >> as you know, brian, i run a spdr line from the monument. that's how we get up here. this is really a historic day, and i think the market really hasn't focused on it. the fed's balance sheet is really about to explode. you just gave the numbers. i want to do the math on the numbers really quickly. we're asking qe4 what today.
the current purchases are $40 billion of mortgage backed securities. they're going to replace operation twist with $45 billion. add it up, that's a total of $85 billion a month. what happens when you annualize that? the existing level of the balance sheet is $2.8 trillion. the expected growth, 85 times the 12 right there. it's going to be up by a trillion by the end of the year if they maintain the pace. well, the level at the end of the year is going to be $3.8 trillion. compare that with the balance sheet before the crisis began of $800 billion. so we're going to add one-third. here's another way to look at this. from '09 to '12 we only went up $1 trillion. we're about to do that in a single year. this is going to sky rocket in the next year if the market has it right.
how does fed chairman ben bernanke take in the unemployment rate? is now it's 7.75%. do the forecasts come down, or does the fed not believe in the decline of the unemployment rate because of things like the decline in the participation rate? those are the things we'll be watching today. we'll be listening to how the chairman explains or rationalizes what everybody in the market believes the fed is about to do. >> steve, akaspdr-man. let's bring in the two guests. we have the deputy chief investment officer. bill, with all good respect to my good friend steve liesman, who forgot more about the fed than i'll ever know, he said the balance sheet is, quote, about to explode. we've got a few trillion dollars already on the fed books. isn't that already the neutron bomb of indebtedness? >> well, potentially, brian. it's sitting there basically in reserves that the banks are
unwilling to lend, so ultimately it provides the fire power, but not just yet. i think steve has it exactly right, though. the expansion to $1 trillion annually a year in terms of check writing is significantly potent in terms of potential inflation. it it just depends upon the private sector taking the bait and providing animal spirits to that fire power. >> i don't know if you saw at the top of the show, our crack team made a demonstration of ben bernanke pulling the economy over the cliff. if we go over, automatic tax cuts, automatic spending hikes on everybody, we must add, does ben bernanke and the merry band of fed governors have the strength and the ability and the fire power to pull us back? >> they've already admitted that, if we were to go over the fiscal cliff, there's little that the fed can do in terms of tools to create the kind of a scenario that we would like to see. so fortunately, the arguments for getting a deal done outweigh the arguments for not doing one
before the 112th congress closes. >> you don't think, charles, they can not just shower the people with love, but shower them with hundreds and 20s. you don't think the fed has the ability to just toss cash out of its proverbial helicopter? >> the accommodative policy of the fed has the ability to bring down rates, and i think it has had a stabilizing impact on housing. we think it's had a good impact on certain financial markets. so for example, during qe1 and qe2, the stock market rose. corporate bond spreads tightened, and commodity prices. and frankly, we're positioned for that again because we anticipate through the duration of the qe program that's in place, and modifications that are announced later on today to continue into 2013, we think that will be the right thing to do. having said that, if the economy is growing slowly and you have a fair amount of fiscal drag next year, you're not going to like the outcome. the truth is you need both fiscal policy and monetary
policy to be working in a cooperative manner. >> bill, what do you want -- steve, jump in, please, sir. >> i really want to get another issue which is out there, which the market is thinking about. in our fed survey, brian, as we reported yesterday, the market is now very concerned about the fed taking all this paper off. $85 billion a month of long-term paper, taking that off the market and the effect on market pricing and market functioning. and i just wanted to throw that to bill gross, who's out there, doing a lot of purchases of long-term treasury and long-term security. what does it mean for the market that the fed is out there, this huge sponge on the long term paper out there? >> it absorbs a lot of it and certainly distorts prices and distorts yields. we've taken a little bit further, steve, in terms of the real economy and suggest that the fed is becoming increasingly ineffective. and the reason why is they're
impacting financial models. banks have lowered net interest rate. margins, pension funds are struggling with liability and asset mix because of the inability to invest at higher yields. all financial models basically are being threatened. that results in laying off people. there are negative aspects to this that go beyond what the fed chairman and the fed basically historically have assumed. we've seen that the past 6 to 12 months, but i think you'll see more of it in the next 6 to 12 months. >> stick around. when we come back, we'll have the fed decision, and we'll bring you instant analysis. we'll give you the stock market, bond market, and the reaction of our esteemed panel, all coming up on this final decision day of 2012. by not breaking down. consider the silverado 1500 -- still the most dependable, longest-lasting full-size pickups on the road.
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let's bring in the in our next guest. professor wachter. we are entering with fed funds below one quarter of 1%, four years. how much has that been a part of the housing recovery? has it been the entire recovery? >> it's been critical. without that, there would not be a housing market recovery. two critical factors necessary for the recovery are historically low interest rates delivered by the fed, and the economic recovery overall. >> so if we go over the cliff and taxes go up on everybody, will that completely unravel everything the fed and low rates has worked to build in the housing market during that time? it will be a threat to the housing market. how far down we'll fall? it depends on the recovery. >> bill, i wanted to ask you
about what you expected from the fed. to the point that susan and i just talked about, four years of fed funds rates below one quarter of 1% or 25 basis points. how does this end? what's the end of the story? >> it ends hopefully with reflags in the 2% area or the alternative deflation. that's really what the fed and other central banks are trying to engineer. they're trying to engineer a gradual reflation that allows markets to adjust over a certain period of time. ultimately, that's where it ends in a best case world. it doesn't necessarily end there, however, because of the negative aspects of these low yields. to the extent it continues, pension funds, and other financial models, basically implode or erode at the margin. then the real economy may be threatened, even in the face of
the higher reflation that we see. it's not necessarily an optimistic smile type of outlook. >> charles, listen, my 9-year-old daughter, it's very easy when she dumpses out leg olegos onto the floor and very hard to pick them back up. isn't that where we'll find it is in gentle reflation? if $200 increase in taxes in a month is going to, quote, destroy the middle class, violent inflation would be a lot worse. >> it would be a lot worse. right now it doesn't look like inflation is a clear and present danger. the fed is going to maintain a very clear monetary policy until we see substantial gains in market conditions. the unemployment rate is down from a year ago, but not entirely for all the right reasons. we haven't had very robust job growth. when the unemployment rate gets lower, and they start to see
some inflationary measures mounting, there's nothing difficult mechanically about reversing the quantitative ease, it all comes down to having the willpower to do it when the time is right. >> steve, it's not about mechanics. it's about perception. it's about psychology. we talked about it off the air yesterday. if americans have to face, good god, 6% mortgage rates again, they consider that high now. it's the psychology. >> i think that's right. we have baked in a psychology of low rates. and there is another bit of psychology, which is the fed's actions. what kind of signal are they sending about the fed's outlook for the economy? and bernanke is struggling with this mightily right now. he doesn't want to send a negative signal about his outlook from the actions he's taken today, but that's the way the market really takes it. question is can the fed ease and do additional quantitative easing without making this psychological situation worse and really making this job
harder for what it's trying to do. >> brian? >> go ahead. jump in. >> it's not just psychology. it's actual economics. it's the reality. 6% mortgage rates double the mortgage rate for many. >> the good news is it's also half of our space. >> 30-year mortgages, their rates aren't going to go up, but the market certainly will be hit for new borrowers. >> one thing on the psychology of rising interest rates, it's more than psychology because this is a highly lefrd economy. the global economy is highly levered to the extent that interest rates go up by 50 or 100 basis points, it threatens the economy. >> a stronger economic recovery and help ensures the inflation overtime is the rate consistent with the dual mandate. the committee will continue purchasing additional agency mortgage packed securities at a pace of $40 billion per month. the committee also will purchase longer-term treasury securities after its program to maintain the maturity.
securities completed at the end of the year, initially at a pace of $40 billion per month. the committee says a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. in particular, the committee decides to keep the target range for the fed funds rate at 0% to .25% and anticipates this exceptionally low range above -- for the fed funds rate will be appropriate at least as long as the unemployment rate remains above 6.5%. inxlags between one and two years ahead is projected to be no more than half a percentage point. and longer term inflation expectations continue to be well anchored. the committee views these thresholds as consistent with its earlier date based guidance. when the committee decides to begin to remove policy conditions, it will take a balanced approach with its longer run goals of maximum
employment and inflation of 2%. on the economy, since the open market committee last met in october, suggested economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather related disruptions, although the unemployment rate has declined somewhat since the summer, it remains elevated. household spending has continued to advance, and the housing sector has shown further signs of improvement. but growth in business fixed investment has slowed. inflation has been running somewhat below the committee's longer run objective, apart from the temporary variations that largely reflect fluctuations in energy prices. longer-term inflation expectations have remained stable. there was one dissenter to the policy changes announced today. jeffrey lacquer, who opposed the asset purchase program and the characterization of conditions under which an exceptionally low range of the fed funds rate will be appropriate. this is anton pearson reporting live from the treasury department. >> steve liesman, let's go to you.
did i just hear -- and i may have heard this before, and you forgive me, i'm getting old, and i forget things. did i just hear an unemployment target tied to the fed funds rate? >> brian, you are getting old, but you did point that out correctly. >> fed rate tied to the unemployment rate. i did not hear that before. >> the fed has been talking about these economic targets for a long time. it was my expectation they were not ready to announce them. i read that wrong. they were obviously making more headway on that in the background. coming to an agreement, there was a whole bunch of people on the committee who liked the idea, a whole bunch who didn't, and i thought they weren't ready yet. apparently, they made some headway. i will point out the 6.5 number is exactly the average we gave you in the survey of what the target would be if the fed had one.
they did say the average of 6.5%. the bottom of 2.5% is perhaps a little tighter than our survey response suggested. we had 3.4% yesterday was the average of market participants. so it's a little tighter on the ip flags side. yes, absolutely historic. the fed did another $45 billion of purchase on twist. and got rid of the calendar date. didn't see the calendar date unless i'm missing something and went to economic targets. >> and the central efficiency of the fed is to get that range mid-2015, that 6.8% unemployment rate. look on the projection page right now, last meeting of 2012 and an historic one. we'll get more reaction to this. first, let's figure out the markets. let's go back to bob pisani on the new york stock exchange. >> the fed gave the markets the two things they wanted. steve, hit it right on the head. they wanted additional purchases. theyn't waed that $45 billion to replace operation twist. they got that. and the traders also wanted some
kind of economic threshold in the form of a clear targets for unemployment and inflation, and they got that as well. with that said, we didn't see much of a reaction. the dow went up -- it was up about 15 points as we went into the announcement, when his high is 35 or 40 points, and now it's basically come back as you can see. still not far from its highs. most of the rest of the markets moved up a little bit. bank stocks moved up incrementally. the bank index moved up to just about 50 points there, right at its high. and then just moved back down again. the dollar, by the way, put up the dollar, it was at session lows as we went into the announcement on the theory, of course, that any additional quantitative easing might be effective on the dollar, cheapen the dollar. you can see the dollar index has been down here. that's the one part of the market, i think, that was most affected by this announcement. brian, back to you. >> bob, thank you very much. now over to rick santelli is the cme for dollar and bond reaction to the fed. rick, before you give us just the numbers.
i guess, then, what we just heard from the fed is this. if unemployment never goes below 6.5% again, we're going to have a quarter percent, 25 basis point fed funds forever. >> basically, they president doed tdo -- they adopted the evans rule, so chicago has to take some responsibility. they might as well have tied it to the orbit of venus because they're not impacting that any more than they are the unemployment rate. it will be around forever. let's look at the markets. they may not be around forever. if we look at what was impacted the most, start at currencies. if you look at the dollar/yen. the dollar/yen was around 83.10 before. it went down knee jerk and came back and is now even higher on top of an overnight run on the dollar because they expected qe4. it's a race to see if they can buy more lumber futures for printing currency between the japanese and the americans.
if you look there, a little different picture. 130.44 beforehand. initially, it rallied, then it dipped. the dollar index also, it was down 18. it deteriorated to down 27. qe isn't good for the dollar, but there's a lot of cross signals. look at interest rates. 2s, 3s, 5s, largely unaffected. that makes sense. if you look at 10s, they were around 5.65. a couple of basis points. longest end took the brunt. we're at 2.88. we moved about five basis points higher on the 30 year. one thing i want to disagree with bob. it's not what traders wanted. it's what traders expected because they put their money to work. >> charles, i just worry. listen, if we -- we got the target now. now traders can gamble on and bet on where the unemployment rate is going to be. maybe other factors like
inflation. can the fed manage low rates this low for another couple years and extract itself from the violent inflationary scenario that we talked about before. that would throw every history book in the history of modern economics. going back to the geico caveman out the window. >> one thing the fed did, they i ignited the dual mandate on unemployment inflation, and they became pretty transparent how they do that, and they linked the time line they previously provided guidance on, meaning mid-2015. they expect to make the kind of progress the dual mandate charges them with within the time period between now and the middle of 2015, and then after that point in time would be the natural time where they would want to remove the punch bowl. so hopefully by that point in time, if the unemployment rate drops, you'll see some animal spirits returning, the economy will be more self-reinforcing, and therefore it will have the wherewithal to sustain slightly
tighter monetary policy. >> we're going to a break. >> brian? >> guys, i got to go to a break. they told me two minutes ago, and i ignored the producers. i won't have a job if we don't go to break. i want everyone to think about this. unemployment rates can go down for the wrong reasons, enough people leave the work force, unemployment goes down. is the fed really ready to raise rates if more people abandon the work force? is that a good economy? something to think on. historic move by the fed. tying fed funds to the unemployment rate. twins. i didn't see them coming. i have obligations. cute obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing.
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answer that or say anything else you want in your national air time now. >> it's a good one, brian. the 6.5% unemployment rate target, how long will it take to get there? that's the question the markets need to answer. i've done some quick calculations. we've talked about this at pimco. basically,ali alitt a level of now. that's a 1.2% gap they needed to
fill. to our way of thinking, that requires that 200,000 a month job employment report, in order to fill that gap, and that's probably going to take four to five years, we're out there in terms of time. and to think that the fed can basically manage interest rates for that period of time, i think, is a decent stretch. which was the breadth of your question. >> bill gross taking 2017 in the super bowl pool. low rates going to keep the housing market chugging along for the next several years? >> can't ignore the fiscal cliff that's out there. got to get over there. that could be an increase in the unemployment rate. the fed is preparing us for potential fiscal storms at home. >> charles reinhard, what do you advise your clients to do on this news of morgan stanley? >> there's news on wall street, don't fight the fed. if you're shaking about the fiscal cliff, don't be stirred. be like bond, shaken not stirred. get on with life and your plan. >> steve liesman, what's your reaction? >> it's a historic move. just real quickly, i want to
point out to people there are two separate programs in this statement and two separate guidelines. one is unclear. the fed funds being at zero is tied to the unemployment rate and inflation. the asset purchases, however, are not tied to anything. that's going to be a question that ties a vague language. the language even in the unemployment rate is very poorly and vaguely worded. we're going to have to sask bernanke about it in the upcoming press conference. >> everybody, thank you so much. we'll go back to fast money halftime in a second. the news conference does begin in the 2:00 eastern time hour. tune in to "street signs." ben bernanke will kind of be our special guest. i hear that randolph and mortimer duke are buyers, not sellers. [ male announcer ] when it comes to the financial obstacles military families face, we understand.
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i'm surrounded by the traders. guys, pete, the market seems to have gotten what it wanted. low bond buying. the s&p 500 has added about six points. it took a little while for the markets to figure out which way they want to go. you can see a little choppy just after the decision. however, right now after the highs of the day. you can count 1436 on the s&p 500. dow at the high for the day as well. >> we've been talking about the financials being the backbone. we talk about the slf all the time, but particularly since it broke above that 50 day, but it makes some sense. the financials are going to be
one of the areas that are going to react to the news. this is extending this out, when i say eternal, bill gross talked about 2015. i can't think that far ahead of myself. this does look like it's going to be a long term, sort of a prognosis when you're looking at what you're talking about when you're talking about 6%, 6.5% unemployment, when we're sitting up here at 7.7%. >> weis, 13.3 is where the dow sits. let's not forget the fis cap cliff move. you'd better get something out of the fis cav clical cliff if the dow to continue the move, the highest since the spring, you've got to continue to fix this. >> i think something meaningful. if you come out the with the solution that gets us into march, which is when it expires, the end of march, that may not be good enough. you're looking at talk of a grand bargain. you've increased the risk
dramatically to your portfolio with the way the market has risen. >> we're going to talk about what's happening in gold. you lookality what the stock market is doing here. santa claus rally. are these now the stages of what we can do between now and the epd of the year now that the fed has spoken, the fed has acted? bernanke is going to speak later in the news conference. >> absolutely. you have the market rally. watch the levels. 1435, 1436 level. 14 r 1450 is the next area you're going to look at resistance. the fed is telling you it's safe to buy. >> you have people making predictions of 1500 on the s&p by the end of this year, before new year's. on the other side of the break, we'll bring you dennis gartman and talk to him about what gold and the rest of the commodity spectrum looks like on the heels of this big fed decision. we'll be right back on "halftime." icans believe they se in charge of their own future. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms.
welcome back. stocks right now are at session highs following this fed decision on interest rates. s&p is good for nine points. let's look at gold as well. dennis, the fed has spoken. you're on a few days back, where i do recall you saying you were negative on gold. are you changing now, based on what fed has just done today? >> judge, i don't think i've been negative on gold for a while. i own gold. i'm openly bullish of gold. i own gold in yen terms. i haven't owned it in dollars in
a long time. >> can you do me a favor? explain to our viewers what long in yen terms means. >> i own gold -- when you own gold in dollar terms were you are essentially short the dollar. if you own gold in yen, you are long in yen. you can buy in terms of yen, euros, the canadian dollar. i look at gold as being nothing more than another currency. i'm long gold, short the yen. and if you look at a gold in yen chart, it is up over the course of the last month and a half. gold in dollar terms is down. gold in euro terms is down. it is a much better trade to be long in gold in yen terms and it is making new highs right now. it should continue. what the fed has just done has -- it's done damage to the u.s. dollar.
the beneficiaries will be stocks. beneficiary will be gold. beneficiary will be the canadian and new zealand dollars. >> so commodity currencies get a boost out of this. >> not a question. >> thanks. the commodity king. mariott shares are up as the company transitioned successfully no a new ceo. fromity small days as a root bear stand, mariott has always been family affair. as i found out in my documentary, behind closed doors at mariott, bill mariott may come off as a mild-mannered i go. but he is anything but timity when it comes behind one of his vintage racers or his company. >> blasting by in his rare 1950s mercedes, you may not recognize him. but take another look and you may realize you've seen that face before. >> these are fast car nets old
days. won a lot of races. >> he is bill mariott. billionaire and recently retired ceo of the hotel dynasty that bears his name. >> i think is important for the customer to know that there's a family and a person behind the name. >> in march 2012, arnie sorenson took the helm as successor to bill mariott who passed over his four children. snrz you at peace with the fact that one of your sons is not going to run this company? >> well, i am -- i'm at peace that arnie sorenson is running this company. >> all right, guys. i spent a lot of time with bill mariott. he comes off as a polite, mild mannered guy. we spent time with a guy who spent a lot of time with bill mariott. he says, picture waking up every morning hit over the head with a sledge hammer. he is a great guy but he likes
to win. that guy is still doing business with him. we take a look at mariott and sometimes a critical look. mariott was known for standardization. you guys have all traveled and stayed in a mariott or mariott property. you knew what you were going to get, right? what happens when the w comes along or the boutique hotels come along. they are a little different, sexier. so there were questions as to whether marriott lost their mojo. well get into how they are getting that back and you can have the secret on how to get the best room rate too because there is a science behind all of that. so for more on bill mariott and the first family of hospitality, tune in tonight. 9:00 p.m. eastern and pacific, only on cnbc. good trade peak. who is building hotel stock? mariott add good year. >> marriott add good year. i know you have been talking about trip rise adviser and the
rest, but -- >> sorenson has done a great job there. >> yes. final trades on halftime. [ male announcer ] this is steve. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. ♪ [ engine revs ] ♪ [ male announcer ] oh what fun it is to ride. get the mercedes-benz on your wish list at the winter event going on now through december 31st.
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