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A box this is dot com blog planned for you right after it got -- joke if you know what happened right in yesterday -- made the joke that Connell.
On the Appalachian trail along Napoli -- with the governor the governor of South Carolina governor Sanford -- It now we find that the governor with the hacking at all he was made in grand prize with the -- drove along the coastline.
Definitely hiking on the system here and what you went by himself -- -- -- out anyway so that's that's the only mention of government -- -- -- it hard to follow that.
And he wasn't on appellation -- That's the question.
Yes I don't know if there's there's that I was last week but they have nowhere near Minneapolis Joseph -- Anyway we -- -- -- today did you know about that.
Did what it's fed day of course -- we have former fed economist coming -- a former advisor to President Reagan coming on.
My sense only from parents will be here later so -- just some great in depth analysis Peter Barnes of course of what.
The Fed is going to do today's evolving -- and I -- didn't move rates but they are gonna make a statement in response and he's going to be real real interesting to see.
-- -- -- -- exit strategy from what's going on here more quantitative easing to come they're actually a lot of questions around today's fed -- honest.
Straightforward to see Glenn normally we do get up by sort comment from the Fed and then a couple weeks later we get the minutes -- the minutes from the meeting -- this time what we're expecting is is a longer comment.
And we'll see what they -- to save on 2:15 eastern time -- so I Kathy Boyle is here to talk a little bit about what to do with your money and it may surprise you because we have talked a lot about.
Green shoots and that being.
Slowly on the road to recovery and -- fascinating got to be careful at this so she's a good person -- about how you should I should have your portfolio going back half of the year.
All right before we get to -- Robert Gray with our top stories including a market that's looking pretty good today right I mean the durable goods numbers came out before the open and it's been off to the -- from there up 75 points on the -- yeah pretty much immediate future for a little bit higher but when this number cross at 8:30 this morning eastern time.
Really got everyone's attention is traders said you know -- we we were up in April.
And -- -- -- divorce and what -- be an outline these numbers to be very Volvo they get revised a lot you know as time goes on but.
What's happened houses put up three months out of four.
Huge jump we are expecting it to decline in these are durable goods of course items like you know computers automobiles washing -- expect in the last three years or more.
And they were up and you look at their for a measure of Bob being a business spending looking for -- up the most in.
Five years so this means you know economists are saying at least that's have been -- this morning.
That they're expecting you know companies -- -- to start spending more their plans of changing instead of -- retrenching they're talking expansion Nelson this is very positive news.
Traders like investors like that's -- the market's moving higher here it's also yet another sign that you know maybe markets started stabilize the economy stabilizing now and -- need to see it.
Sort of trickle down to consumer spending that's what we're not seeing so far but looks like business spending.
Starting to make a little bit of a turn here we have a housing numbers out as well new home sales.
A little bit disappointing you know they were a little bit lower than we were expecting.
But overall not enough to take you really that the shine off the durable goods and we get the existing -- -- out yesterday.
Pretty good news in this if that's the biggest part of that market and you homes keep in mind they're competing against the existing homes that are in foreclosure short sales -- a lot of competition out there for you -- so we did see the amount of inventory slightly decreased.
For new homes if you're looking for a silver lining that would via.
That would be yes so there -- showing some of the new home sales data on the chapter.
Those that are watching us live now I'm you know -- one last note Robert -- gets -- -- earnings weren't terrible either mean or call last night that's it exactly and the other day we're talking about the lack of -- fundamental news helping companies here we've had cited a lot of disappointing earnings like FedEx last week that oracle out bullish for technology after the bell last night.
Their sales were down as much as -- -- anticipated -- talking pretty bullish about going forward again this is.
Business spending a largely oracle software not to be confused -- Microsoft where you would see.
You know you and I -- -- -- home computers but nonetheless or quality of the suspending looks like it could be -- stabilizing and you've heard bullish news from US steel.
AK steel and also from ArcelorMittal -- -- not -- increasing.
Capacity basically making more steel products or you don't need still people are buildings that is you pretty bullish for the economy go to port Peter Kenny -- -- equity markets has.
Cause of the purest -- play and lastly.
Everyone is an armchair technical -- these days and the golden cross for the fifty day moving average in the 200 day moving average crossing.
To today's trendy to move up and he calls it the holy grill Peter -- does that everyone's looking to see if that BIS and 500 can stay above.
That 200 day moving average right now so keep an eye on that because it can become a self fulfilling prophecy -- -- many people are trading off of it.
And stays above it people think -- the trend will continue moving higher which is basically what it is it's an average of where the let's be spending another 200 days -- exactly the trend is moving higher people's Tyndall as well they say -- but it can't stay there and it falls down.
It starts selling.
Thanks Robert up one and a half percent today about the way -- people talked -- tomorrow and I'm you know it's like these little signs Robertson -- that that things here if not.
You know maybe getting a little bit better we've turned it we've seen the worst feet deep -- he can make that case if you want to -- During the.
Is that how hard here -- trying to -- the the square peg in the round hole.
Get -- I know I know -- -- it seems a little bit.
As a -- McDonald's was talking to us yesterday is about health care spending and statistics that sometimes you can make status and as you mentioned the phils can profit that's out there in the marketplace is -- was just talking about -- -- so.
Get be careful with the data because no matter what we're still so early on -- that -- good data time that we don't really have enough information to making.
Evolution it is it did well that's that's a good point it's difficult to draw any.
Definite conclusions from one way or the other because you can make either or argument Kathy Boyle -- cheap televised is our guest -- to start the -- to see you again -- great which argument you make -- that hey we're start to get things turned around here the worst is over or.
Be careful we are so busy on the financial planning site and we're seeing people in debt.
Up to their eyeballs in can't get themselves out of it if that new -- like you get as the last six months or is this get -- because of falling to get because of lost my job and done -- there's other things going on the economy yet -- some more of its like no bonus bonus didn't command -- I was betting on not exactly so we thought we wiped out tax liability or whatever we had pending instead we're force she's our credit card.
A lot of people are just having we can't come to Jesus meetings you know it's really like -- really realize that they've been living beyond their means for a while another scare.
So -- -- the most that the people have.
We see it everywhere credit cards we've had a couple the other day than it almost 2000 -- 87000.
Dollars in democratic hearts.
That's not an easy problem solved.
It takes for ever to dig out of that -- you -- -- you to want some money from some from someone and you know so we -- -- from parents can we borrow against -- whole life policy.
Can they Vargas -- -- in case we have on rolling his soul for a kid his new one.
Which could be managed better pop up -- somewhere else but you're gonna have to borrow and then you have to start making payments on that right away and I think with him with me.
Well who did -- for -- -- a small island at 171000 each and going to be able -- about 8000 so 8000 over five years is going to be your payment.
Few hundred bucks a month prize.
Is that you got to get sued too -- to went -- it just me here kind of how we talk -- -- credit crisis we tend to use that term a lot less these days because.
It seems like we just -- the recession now but we forget that there -- tied back to housing -- just right at my and we have another person to dispel carried away -- first -- analysts say it was great.
And we call it confusing a bull market with brains and she's a little carried away and she's -- drive balls with 3700 a month and negative cash while.
So people that are watching now that might look at this from an investment point of -- try to make their own judgments maybe they're not in this particular situation to take away what that household debt.
It's still the biggest problem that we have to deal with -- It's a yes and -- which member of that -- back to GDP because GDP is our big.
You know 70% of our economy is the consumer spending and the consumers not spending this and -- -- worry about their debt that they weren't that weren't weren't worried about two years ago that's an issue.
And the housing market still has more shoes to drop.
Despite the numbers coming a little better than we -- you know hope to this week on existing home sales and -- -- as an example of issue that.
We have a huge -- shadow inventory on the streets and they're not -- property out and somebody were working with sell apartments about it for 289 the developer has not sold all -- -- -- they have them priced at 150.
I'll say that's a big problem so you have to be careful he made gains in this market takes some of that off the table.
Where eighty -- at the table where he put it then money market -- treasury.
Yeah I think treasury prices will go up short term because in the market falls money's -- -- back into cherry trees.
And you can buy treasury that NE TF Leon TLT and our portfolios is paying us 4%.
And it was 125 -- Soledad 88 it's around 82 right now says he makes upside there you.
And this is a -- -- one again investor that's watching on a personal note Chris in Los Angeles just wrote -- that he had.
Hold some stocks are only a few bucks away from breaking even and assets as soon as they do I'm selling them.
-- might -- heard that you know we've heard that many times with people as soon as I get a little closer as soon as it gets to hear.
That's why support resistance lines exist because those levels are -- are other people said.
When it gets here I'm going to -- -- have to look at the chart of the stock.
The unemotional I called being a helicopter.
Think out of your body you look at your situation is to the what's yours and again emotional now the market may sell off and then rally in September so if you're willing to watch a sell -- happened possibly a deep -- -- until August.
And then followed by rally if you're willing to be back to even in September in the go ahead hold on.
-- -- -- meaning retest the lows.
750 on the -- and paid okay.
Well wouldn't you wouldn't get all the way down to the to the march low but doesn't -- -- some analysis that's.
In the neighborhood of a retest after.
And also -- fun with numbers -- 100000 dollars if you happen to invest in middle march -- week marking need this 3040%.
-- and 30000 up it 25% correction off of that.
You're gonna lose.
30000 dollars -- -- that I feel like a lot.
Right right right yeah we talked late last year remember speaking to especially during the time we are seeing are huge down days that that they -- You know hundreds of point drop from -- down for example and you say that you.
At that time that you had you you had.
Figured you had a game plan -- that was working for you guys to what was working last year.
And that -- -- strategy of putting into effect this year yes pretty much what we've done it's our traditional portfolios which we call core.
Are 50% fixed income.
So we locked in some great rates very short we're really worried about longer term rates rising short term we don't think it's an issue the longer term -- -- -- -- when he maturities.
So we've got great yields and -- Portfolios the other half would basically go in and out of the market where we do it is US Arizona is sectors we -- just DT out so large -- -- actually releasing passover not really adding active managers.
But -- active managers don't want timers like us.
And the you have to hold a fund for sixty days and in this kind of market you have to -- sixty days off -- -- that's interesting the united -- -- what what is it can you give -- attack brings them that would normally would hold it it depends because right now we're predicting a further rally some more -- -- this week and then rallied to July 10 to thirteenth that test specifically our -- And because we -- these charts with the -- life still and -- even hearing on the show look I've.
I'm trying to get over the last several weeks is that it is -- and hot for example we think you guys -- the emotional part and the market.
You look at the technical charts and -- just tell you went to get in and out it does and that's what you have to this has been a very emotional market so that's the part and everybody become a technician everybody's talking that -- -- resistant lines and -- scary when that happens you know but.
What does that it does that make for an irrational market for if -- cat yes absolutely we get hammered on some of the stuff when it didn't it looks like it makes sense you've you've got hurt on a couple times you -- -- we missed a good portion of the rally we you know we got out too early because I really didn't trust it.
And it was driven not -- fundamentals at all that's what we talked about last time is that how -- so how did it go from men.
From that point told now well now we did we have.
We were along for a little -- we gotten a little bit returned back we -- very tight stops.
And now we've been in -- since last week really we've got some big gains on those pieces.
What if it was -- -- the Federal Reserve credited today and we're we're gonna talk more about inflation.
And overall what what is your perspective on the actions of the Federal Reserve.
And what what the reaction could be in the market they they have to come out and basically -- nothing they've got to continue to keep this fiscal policy stable low rates.
They can't thinking about inflation but -- gonna have to comment about rates haven't gone up on the ground -- it could it will they come out should they come out and be simple decision Woodward is not going to raise -- to the end of the year we don't see that happening.
I think that they may have to make some statement I don't know if he'll be that and -- it -- -- very -- careful.
Careful and delicate with their language since it federal and you look at -- -- detained -- his move from one option to the next just -- -- -- Three weeks.
319 to 399 that's a huge difference you look at the TLT dropping from 125 to 88 that's a huge human and pet -- gates stepping back away what does that -- an investor that.
The aids is not looking at treasuries with the message the message is that didn't most of the country and the most investors are worried about higher rates and inflation and gold being up where it is you know it's still at 900.
You know an -- and so -- we think over long period of time will be of great hedge against inflation are dollars a week to.
Overall -- -- -- concerns so you know got a lot of kind of big things hanging on behind -- had.
It's instinct is the Fed or I should say the market is -- getting ahead of where the Fed would like it to be over the Fed is in their thinking we're gonna talk more about this I should point out also.
David Jones former fed economists in to join us and -- a little while Melinda -- and who was the it's an economic advisor to President Reagan and their -- to -- for that roundtable so we'll get into it at some detail but the point.
Of that that the Fed.
Doesn't seem concerned about inflation but the market is telling it it should be or the board the the bond market is already pricing in that inflationary concerns of now the fastest -- well are at that what we do about this.
Right right and wonder what they'll do.
I it's going to be interesting to see you know what -- already buying tons of treasuries -- -- the increase that and -- a balance sheets off through the -- for a exactly the deficit is so large.
And you know -- Explain to clients like water -- damn you know they just -- so much water and eventually does flood up on the site and so.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- I think that's ahead of itself as well -- -- it's good to have that perspective can be about a lot of conversation about -- still go to Brazil go to China but it's and it's thanks have a some diversity and.
All right so -- in my right Kathy -- here from -- -- shall stay with us we have a lot more to talk to.
Here's what's coming up later on the show Bob at towards the end of the hour we have this what I think it's kind of a fascinating discussion on this being a man session.
Talking in all seriousness about.
All these men that have lost their jobs relative to women -- guest coming on -- says.
This was done well maybe an exaggeration who was done on purpose of the which stimulus money was directed towards areas that were purposely there to help women don't care and education.
-- -- coming our good friend Teddy Weisberg Peter Barnes David Jones William Biscayne and a lot coming up on fox just come.
Yeah where you.
Clues and -- yeah.
Africa and hand him.
How could it turned ten today defending that right tweet just all of my time in case you missed it for -- -- Q -- -- -- -- -- -- -- -- -- -- -- The F I think are happy -- team who came up with that graphic and probably isn't it at 5 game eastern time and connecting them.
On the network I really don't think there's anything more -- -- at Peter -- wanna take it from there.
Yeah I guess when I got up I just -- -- think guys that what people don't know that Ben Bernanke saying oh very good Peter you do karaoke.
-- -- -- Let's not you Terry -- guns -- complaining go from just search form on YouTube and you'll find the area to another massive -- a minute.
It's true though they had a U.
Couldn't think clearly -- waiting for all of my time do you think that I thought -- Later this kid dangerous.
Like all right you know -- President -- -- from -- yeah.
I didn't go please -- Think just have to okay.
Peter we see Casablanca the world what we did it Peter I don't know if you -- -- see the graphic because it is Ben Bernanke and it.
The big Afro talking about stimulating the economy of course playing on the fact that Federal Reserve has made all these.
I can't -- you can't really -- -- -- different policies that as this with that intention.
So what is the Fed go from here are we gonna see more Ben Bernanke stimulating the economy or -- to be different Bernanke and maybe new graphic that we need snake from.
We can we -- archive archive the show right so I think we.
-- online and look at this later -- apathy that hello.
Realize that was verdict if the fighting out OK you can watch and I'll go below you that you have iTunes you can watch -- -- -- -- -- so many options -- on your iPhone -- -- I just got an iPhone yesterday don't want to them that they're okay so we got the announcement in two hours from now on the head over to the to the interest you press room just a little bit.
Following up like what Kathy Boyle was saying in all seriousness interest rates of pop back up.
Since the April meeting and so what are we expecting -- obviously not expecting any change.
In the target Fed Funds rate your term interest rates zero to a quarter for for percent -- basically zero we don't expect any change in that.
What could we see -- to try to help bring interest rates back down some change perhaps in the treasury and the securities purchase program.
Mortgage backed securities treasury securities and agency paper Fannie and Freddie.
One point 75 trillion dollars in commitments since the beginning of the year still a lot of capacity.
It for -- -- buying that the -- that the Fed hasn't even gotten they believe they believe that's more than a trillion dollars -- capacity left.
Of that one point 75 -- so -- still a lot of room for the Fed.
To go out and buy these securities to try to get it -- you know Buick you give you increased demand by the increased purchases.
That it raises the prices and thus lowers the interest rate that could help to bring -- -- back down.
So some analysts are expecting that.
Rather than actually.
But we we could see a commitment to increase those purchases with which might have some effect on the credit markets and might have some -- On treasury trading and and -- securities ratings and an MBS.
But they can also change up the -- because right now they're looking at one point 25 trillion in mortgage backed securities and looking at 200 billion in Fannie and Freddie debt and the looking at 300.
Billion in treasury purchases we might see them change that they might switch it up and say well you know.
We bought an off a mortgage backed securities may we should buy 500 billion in -- to help try two increase treasury security prices and thus lower interest rates that way so that's what we're really watching for here.
And we're also -- looking for any signs of what the Fed is thinking.
About where the economy is right now.
A lot going it is and I -- -- saying it earlier for a meeting where we know that -- any change interest rates there's still a lot of issues that the -- arrested.
It worked out -- All right Peter thanks a lot we have a great round table to get to talk about this.
As we move on here I want Buffett's been has been being interviewed by with Clinton also the Fox Business Network and some headlines.
I'll come out of that interview as well we probably should -- Is let's say a little bit about it because that's back to making some comments about the dollar Chris who retired men inflation the Fed -- -- the -- to play.
About -- the dollar will not necessarily lose value against the pound in -- course it has recently -- blast -- several sessions.
But will in terms of its real purchasing power that's -- being a city offices said.
That he expects US to keep the AAA rating for decades to come.
And he also the most provocative a big -- -- out of all these at least it wasn't seeing right now I said Warren Buffett says quote.
We're lucky we elected Obama.
And he calls him the right president for the time so I should simply they're coming from Buffett of course the president has a big night -- with that they get health care open house that is going to be airing on ABC.
He -- -- -- Buffett should you know it's been a long time supporter of idea of the president financially enough that the media absolutely had an advisor to him as well -- anyway so that continues now let's welcome in our roundtable David Jones is with this president of idea.
Or the what secretary to president Reagan's council of economic advisors also cut enough to join us there to -- from the Cato institute and Kathy Boyle from his own sponsors that would this year.
In New York.
We're going to talk about a number of things of course what the Fed is going to do today but also about the job done so far by Ben Bernanke as the chairman of the Fed David let me begin with that.
To you how would you grade Bernanke as we head into yet and of the decision and he asked me today.
-- one of my many jobs Iman university professor down in Florida wanted to.
Florida State schools down there and Bernanke started with a solid beat -- he was behind the curve in 2007.
In dealing with this credit crisis.
I thought he caught up with the -- recognize the reality of the situation better in 2008 so I moved him up to a B plus and done.
Did when he came up for these unconventional.
Policy actions that you've been talking about these.
Outright purchases of agencies and mortgage backs than treasuries I've got enough to -- -- -- so he's working his way.
Up degrading curve but.
He still has a long way to go his next judgment he's certainly not gonna say anything about that at this meeting I think.
The Fed is going to be more devilish than the market thinks about.
Economic conditions that this meeting and certainly they'll keep that.
Record low Fed Funds target unchanged at -- -- Point 25% but I do think Bernanke has -- critical judgment call.
As to when he starts to pull back that is to raises funds rate and the pull back on those huge.
At that huge fed balance sheet now up around two trillion dollars when normally it's less than a trillion.
Right as -- that's interesting.
And you -- an a minus let's take that -- and the go around the table here to see where everybody else stands on.
How they would rate the Fed Chairman William where do you put Bernanke in the job he's done so far.
Well I think he's had taken corrective actions since last artist.
Which he's doubled the monetary base in response to a huge increase in demand for money.
And that increases the demand for money is -- consequence of concern about the value and liquidity of all kinds of other assets.
And that's been appropriate response.
I'm less confident about.
Judging whether judging this policy buying all kinds of different kinds of essence.
The commercial paper money market funds and so forth.
And thus less confident about any kind of judgment about that.
Most critical of his policy and bailing out institutions starting with the bailing out Bear Stearns in march of 2008.
And the continued actions to.
Institutions financial institutions against failure.
I think that's a very bad policy mistake and we'll see whether he keeps that up.
But -- never forgetting Kathy T that the Treasury Secretary with us have -- that the -- Bear Stearns some of those institutions as well.
Wait -- how it would -- -- again continue that it it seems that we have some positive comments about Bernanke gave him the same.
You know I think from the public perception it's not as rosy I think he's only got positive rating in the 33% range in terms of what he had -- -- right.
I think he was a tough spot I think he was running to catch the bus.
You know and he really -- by Alan Greenspan yes yes which you know ran rampant for years and nobody's taking you know.
-- ownership of that and this was created.
By Greenspan's policies so Bernanke had his back against the wall.
And the pressure from the administration and Geithner you know at -- don't think that he had much choice and I don't think he could have let your fall.
Because I think it would have created a much bigger crisis sooner.
-- do you think -- -- it -- so you don't make that same distinction that William makes is there anything that you would make a distinction on terms of -- this is something he's -- -- a little bit better vs here's something where he's.
Well I -- -- again a lot of this wasn't really his decision you know I think he again was sort of forced to pick up the pieces yet and I think you know the massive liquidity certainly did calm things down however I'm very concerned about the effect in two years.
-- -- I don't know I did one thing I was gonna stated David Jones which I think loyal to everybody but I think it's interesting and I think I've heard David talk about it before earlier today so -- bring it up is that.
Now this all this talk we talk about this morning as well Bernanke keep this job will only be reappointed by the president.
And it would be kind of strange if he was in a lot of ways David because if you look back at history.
Most the times Fed Chairman they need to keep their jobs longer mean there was the one time in the seventies.
William Miller I guess who -- to be the Treasury Secretary is only there for a couple years but mostly of the Fed Chairman David have been their pearl for a long time it's only been sick since nineteen.
Fifty about I think.
That's very true and your point is well take it.
It's highly unusual for a fed.
Chairman not to be reappointed.
Think back to the longest serving Fed Chairman.
William McChesney Martin junior appointed by Truman and then -- down the line.
Eisenhower Kennedy Johnson.
Stayed in for.
I think virtually nineteen years of course Greenspan was eighteen and a half years so.
And Paul Volcker before Greenspan.
Two terms so.
It's it's highly unusual not to reappointed Fed Chairman it is true mr.
Bernanke is in the it is really.
In kind of a difficult situation here.
William made the point well that this whole area of going into saving.
Companies is totally outside the range of a Central Bank but I think the point was already made that.
The -- goes out of its way to say that they have to have a signed letter from the treasury.
Acting in partnership in this rescue of companies starting with Bear Stearns and of course including AIG that is a slippery slope and of course the new.
Reforms that Treasury Secretary Geithner -- talked about is.
Coming into the picture here in which the Fed may have to.
At least on the regulatory side venture out into that systemic.
Risk issues so.
It is a difficult moment for Bernanke.
And I I'm trying to get a measure in terms of the president's statements he's made a couple of them on Bernanke's.
Performance as to what the president thinks generally speaking he's given.
Sort of backhanded compliment he says he's doing fine but he hasn't yet.
Made a decision on whether or not he would be reappointed.
That probably won't come until.
September the only thing other thing I would say is I I certainly hope that.
Summers the head of the National Economic Council who will have some.
Influence on Bernanke's reappointment won't follow the Dick Cheney path in which mr.
Summers considers who might be the best terror Fed Chairman and -- and.
How bright it -- relief at NASA -- I -- and that brilliant but.
Summers is brilliant but he lets us know what you know what it won't send him yet another backup get a compliment to some of the worst kind rated that's our bosses can't meet Sidney gadget.
Isn't doing fine yeah.
Like how I got today and if you have to say you would rather here's the big different William that I -- great to have you if I ever penalty because.
You have been hard at the council of economic advisors and you probably have some insight as to what's going on here you know Ben Bernanke has -- -- his.
Former colleagues in part of his team in the Treasury Secretary now as Tim Geithner -- -- have Larry Summers.
Who absolutely to David's point did not dispel any sort of about questioning about whether or not he's qualified to take multiple roles.
In the government show -- I think this is playing out behind the scenes.
Well Larry is who worked for me as a member of the staff of the council -- you know advisors to get I have very bright he's very.
-- very bright he's a very good economist.
But I think he probably has better political judgment that is judgment about monetary policy why I think it would be a mistake.
And less in the absence of a major.
Mistake by Ben Bernanke.
To to replace it.
But why do you believe that why you believe that that that Larry Summers had better political judgment then.
But his bitter political judgment and his judgment about monetary policy about monetary -- economic judgment.
Is the economic judgment in it in general is really I think quite good.
Now has his his bitter political judgment I think as a consequence of his period in the Treasury Department and being close to the president.
That is different from Bernanke's own history and political judgment I think is is a very important.
Part of the job of being -- being the being the head of the federal Federal Reserve but I think the key eject key characteristic do you look for -- judgment about the about the conditions -- about the possible use of the Federal Reserve.
Ben Bernanke is one of the leading experts on on the American Great Depression of the 1930s.
And we are close to some of the conditions that we observed in the 1930s.
And I trust -- judgment on this much more than -- -- -- So it sounds like you think that -- Bernanke and -- we knew we have to almost to use Warren Buffett's.
Term for President Obama obviously his -- -- kind of the right now at the right time than it is his expertise is right for the moment William is how you see it.
First of what do you think Summers if he was here just hypothetically would do differently in this situation it wouldn't be right.
I'm not confident about I don't I don't have good general that because I don't.
I don't understand how Larry will react to was -- with the powers of the Fed to changing conditions.
I think we're close to a bottoming out of the of the real economy we've had over the past three months we've had an increase in stock prices and we've had an increase in the purchase.
Purchases of -- existing homes and increase in the price of existing homes.
Those are one of them among the more reliable leading indicators of -- change in the real economy.
So I think that sometime this fall we'll see a bottoming out of the real economy.
And then we'll take some time after that before we see it decline in the unemployment rate and other like indicators.
William whenever our viewers -- -- know Larry fell asleep in any of your meaning.
-- that's good question -- It William that he eight Africa they have one of our viewers is asking if Larry felt sleep in any of the meetings he ran.
Maybe isn't maybe he's not something that -- maybe didn't hit hit hit it after him.
A little while specific thing that here -- -- -- it in the scenes right now.
They were not gonna get a whole lot of -- -- -- some comments coming from Ben Bernanke mentioned the public comments is not.
Maybe that public confidence isn't there but is -- really needed.
Well you know that that I think that might.
Play into the situation because remember Obama and company has managed this crisis you know since they started up their PR campaign.
You know constant appearances to really manage this may think they seen the results because the market increased so.
Adding that you'd be very wary of that.
And you know I have to realize that -- could be a -- confidence that they take out of fed chair and put a new one -- especially an -- -- the markets could react and they have like I think they -- -- I think they need to -- constant you know the end there was a lot of concern Greenspan when the administration changed to the Republicans back after Clinton.
-- whether or not you know he would be continuous and her -- to take its place it was so much you know concern.
That I think taking a Fed Chairman out after just a very short term is going to be.
And he had any more federal reserve chairman of writing books in their bathtub -- this was about.
There's no -- we can't anymore.
It's from crazy Greenspan who all right Kathy thank you very much -- David Jones -- -- in the panel thank you very much all three of you for joining us.
We appreciate that there's agreement there that and Bernanke stays on as the Federal Reserve Chairman and we'll see what kind of -- -- in -- communities are animation.
Certainly appreciate it take it to go to break and -- and then come back talk to -- essentially refuted animation so you look at that.
-- Yeah where you.
Issues and letting them go.
All right the market up a little bit ahead of this fed rate decision that we're gonna get this afternoon that we talked with our panel their 58 points higher in the Dow.
-- ballots Ben Bernanke and his job performance this point.
Now Mike -- toll senior editor at -- joins us to maybe talk about how this market to set up to react to whatever the Federal Reserve is going to say.
We think housing looked -- -- afternoon.
-- -- the the journal pointed out that the average last war fed decision days there the markets have been up to 2.5 percent.
And that they alone as little as one point two up to four and a half.
I don't know why that would be necessary because that was a period when you actually didn't have.
Any doubt about the true outcome right so it's just kind of an excuse to you -- -- -- -- the -- still our friend.
Yeah it was before.
I don't know -- you know I think right now the Fed.
Statement is going to be dispense with relatively quickly because it's really in a narrow band I think.
Of expectations and what it says.
So the stock market is kind of in the process of sort of very meekly taking back some Monday's losses I think will quickly turn toward okay how does the dollar react to this.
Out of bond yields react to this and that will lead us in terms of what stops -- We started have a conversation with Kathy Boyle earlier about the bond market in this idea that -- that -- the them the bond market is telling us -- you should be it's concerned about this inflation thing.
And the federal -- sitting well not yet almost saw when guys get -- win out there.
I'm not persuaded that at this level the bond market is really raising inflation alarm as much as normalizing -- when it does and -- -- great yields are -- low.
Solo right near the ten year treasury yield is back to -- was in October October it was it was at the bond market was in a fit of worry about inflation.
And right now if you look at the -- treasury inflation protected securities.
There are implying expected inflation over the next ten years of about 2% a year.
That's not that's just kind of a normal rate in fact -- normal so I don't know that really we have to be persuaded about the inflation scare just yet.
The thing we do have to worry about is we might get inflation in something.
Not Consumer Price Index inflation the risk of all this money being thrown around is inflation in assets like it's not going to be houses which we saw the last time around.
Could it be commodities again may be but I'm not worried about economy wide inflation.
At this level of unemployment and underemployment and with 68%.
You know capacity utilization -- the.
It does bring up that question that you kind of just raised there about what the next quote unquote bubble might be because after the tech bubble burst at all never let this happen again are we basically let it happen and housing after that it was some of -- The policies that were -- -- fix the economy -- lead to that so we do run that risk here really think the risk is great.
It's interesting it's I I asked people this all the time on Wall Street because that is is the sort of logical sequence -- clearly all of this free money is going defeated some kind of bubble and you don't get a lot of clearance back yes it could -- -- the commodity in emerging markets Bobble.
If you can call the -- -- to -- So that's one.
Possibility people talk about him being a bubbling cash I don't really think that's -- you can distort the value of cash just that there's so much of it.
On the sidelines and it basically giving you know return.
But that doesn't really.
Behavior alignment during -- caused speculation all the rest of it.
I know one not sort of -- almost uses that the next bubble is in government policy.
Someone just said that the next government next bubble big government services Jeff in the -- resident.
Yet in fact there's a guy John -- was it technical analyst -- this week put out reports sort of kind of tongue in cheek saying exactly that.
But again that doesn't.
Asset values that's what that's definitely the bubbles distorting -- -- way out of whack to really what they'll all long term or worth what you should pay for them.
Well although maybe that you could define that in terms of government services we're going to be paying a whole lot for them.
This is missing and those looking for some of the comments and I just asked our viewers to write in -- about the -- the Fox News Channel should be back just Melissa talked to my accent toll.
Barron's -- you brought up commodities -- people think well maybe there's gold that that is something that could run up because it just seems like every.
A lot of people made the case to me for gold and prefer a number of different reasons whether it's inflation or just someplace to hide.
But that that idea that they're gonna go and throw at least some percentage of their money into -- Popular idea and I think that the fact that gold remains well below its -- He's almost like the dog it's not blocking -- why isn't gold doing what people.
You know logically expected should be -- right my personal theory is when it went up above a thousand in February 1000 dollars an ounce.
He had so radically outperformed.
Every other commodity which got just destroyed that that's what gold -- it holds its value doesn't run up in value.
Necessarily dislike -- money out there fear of inflation in the erosion of currencies so to me.
You could say you can allocate toward goal but that doesn't it has to go to 2000 dollars an ounce for it you'd be right if -- kind of stays where it is.
But I know a lot of people -- -- -- to crowded trade among hedge funds to actually own some gold gold futures.
For a while there the exchange traded fund symbol GOP on goal was.
You know extremely.
Crowded in my opinion yeah a lot of individuals going too much of it so yet remains to be seen but.
It's a candidate aren't let's bring Teddy Weisberg and his kind enough to join -- Seaport Securities of the New York Stock Exchange and Michael stay here to talk about the markets had a good to see you as always I don't know if you heard.
We actually started this conversation.
Mike brought it up and we just continued to know what didn't.
The next bubble might be because we were talking about how they we had a tech bubble we.
Got through that it's an all never let that happen again next thing you know that the housing bubble and now we're trying to solve that we wonder if we're creating other problems down the road you ever think about that.
Guys I guess that yeah I think we're get destined to go through on the bubble after another and.
I I think about it I don't dwell on it it's awful hard unfortunately it's awful hard.
You anticipate that bubbles simply because when it -- The time period involved courses quite late field.
You know 510 years perhaps number one.
And -- that -- -- you know a lot of good things are gonna happen and people don't realize they're in a bubble unfortunately without the benefit.
A point -- -- -- -- when everybody's nobody gets hurt but what do you think of the market right now generally speaking Teddy we're setting it up for -- fed meeting this afternoon decision.
Today were up and what what do think of things.
Well I think efforts of all you know coming to the end of the yet the second quarter the first -- -- the year.
So they -- think tendency when we get to the end of the quarters.
To see a little portfolio while window dressing if you will head there is a reasonably good chance.
That we'll see an upward bias.
Through the market at least through the end the did the ended June which is not very long we're talking -- basically another 56 trading days.
That's selling them very very short term I would think that will probably going to be in reasonably good shape market -- -- that fed meeting.
I don't know myself.
And -- that I speak you'd -- really not expecting anything dramatic.
To come out of the Fed meeting is -- -- -- you -- write you can write them notes yourself at this point beyond cure they're gonna tell us that they're not too concerned about inflation.
They probably should be a little more concerned about -- -- and the slowing economy.
And -- payroll -- point their point guard -- these same areas where they he had.
Some signs that some signs of growth but for the most part I would suspect that what we're gonna get is a pretty benign.
Bill they wanted to talk about Teddy lifers with -- from the Seaport Securities -- -- the exchange -- -- it's always here's video from Barrett's.
Is this whole deal about compensation champion and if you can weigh in on this -- all -- the stories in the paper this morning.
About city -- Mike and I'm going to talk about -- -- today.
And Liz MacDonald here fox is done -- reporting -- Merrill going the same way that this is new Wall Street emerging where we're gonna see higher salaries.
And lower bonuses.
Some people read that a -- people getting a -- -- -- higher salaries but that's the to me that's not really the way to read into it it's -- they'll make less money overall -- an -- we'll let everybody have their own thoughts on it but.
What do you make of how things are changing -- -- Well I would say this heavy dictate if it lost -- in general now they got to pay with a broad brush for the moment but in general if Wall Street goes to a to -- To our business plan which would basically pay -- higher salaries and lower bonuses and it will be that complete reverse.
All of these.
The culture that I have grown up begin wolves feed for the last 45 or fifty years so that's a bad thing here or it's OK -- you well.
I -- at it as somebody that has to run a brokerage firm I would much prefer to pay low salaries and bonuses based on performance of my employees.
There reversed from a business point of view from a business model point of view I think gains.
Very expensive and I would find it very difficult.
On the other hand.
Wants to be historically -- always attracted very financially motivated people.
I and I suspected that will continue.
And know about it no matter what and I don't think.
That you're gonna be out there raises salaries and up to basically compensate.
Those highly motivated highly rewarded people that it used to getting big -- -- I just don't see.
I think basically you've got -- go from the frying pan right into the fire.
And people who make less money overall total competition like let's look ahead you weigh in on this is.
As well as some of the viewers are as we're talking city India today.
But -- -- freeze salaries and get around government restrictions -- says Bruce says I don't like that city is doing but I understand it.
And you know Paul and Saint Louis what -- Can city -- to try to keep their people because of the -- have been put -- place I guess so what to keep.
It's me and we talked about this already to me it's just you have to present the whole story is -- and some of the newspaper headlines and even on this to me were a little bit misleading saying they're giving raises right.
So -- if you make less money.
No it's not a race see here's the thing that the context is everywhere to be paid last.
Less than last less than two years ago maybe equivalent to last year going to be more certain because it will obviously -- -- more salary.
And it basically the salary is simply making up for a piece of the -- bonus now.
The other side of this is that these single year bonus.
Was part of the problem basically you had a great incentive to have short term gains.
To actually manage your book or your business four today and the next few months and who cares what happens next year because you you get the -- -- -- you and it's it's done with.
Now -- the market is gonna determine if there's going to be even a pool of of profits to distribute even in this way right and to be honest with you and people think I actually have always thought there's been a problem of labeling when -- came to bonuses.
When you hired investment banker.
And say you're you're base salary is 200000 dollars even though I know you made four million dollars plastered throughout the firm.
There is a guideline unexpected bonus out there based on a range of potential outcomes it's not as if hey maybe I'm only gonna get -- house in this year.
If I work hard and and the market goes goes the other way.
There's always been in mind a total compensation.
Mindset out there and it was just a matter of exactly how big Obama's gonna be so this is gonna Alter that a little bit and is essentially gonna have everybody.
Operating I think and -- into probabilities with -- me.
The right and bond guy here one of one of our good viewers says watches every death is raising salaries at Citi just raised their fixed costs of the time of the makes no sense -- -- -- that's true because.
But the cost should go down overall they're paying less but -- raises -- no fixed cost nominally but the problem is when he reported when they report their compensation expense and a quarter.
They accrue what they expect to pay the bonds in the first quarter -- already setting aside the money.
For the year end bonuses they just have to estimate exactly based on.
Profitability and other thing to wonder what -- thinks that that is summit he said earlier -- you're running for a you know brokerage firms and to down there on the floor.
Are your costs gonna go up or down in this new Wall Street do you think.
Well I I mean I can.
That I can only speak received -- but I suspect.
I I understand the concept that occurred to -- the -- at all this.
That conversation came out of watching about salaries and bonuses but quite frankly I don't intended change any -- -- salaries.
I contend I expect that we'll continue to compensate people exactly the same way.
Simply because the bonuses are based on revenues that they generate and it is it fixed formula.
And basic -- -- another form of compensation you know I think -- you can call it whatever you want.
But basically we instead of five people give reduced.
And and -- revenue into the firm and I don't see that changing I don't think salesman.
Anywhere are going to see themselves getting paid higher salaries and that percentages.
They -- about that's not really what motivates people that only a Wall Street.
But any -- series you have them which you get to bat and every industry -- so the point out somebody coming people coming up we have this Mike and I -- -- earlier as I said.
Saying hey listen Wall Street guys are making more money again mother out there.
Run in this economy into the ground that is not a fair argument you would say ten.
No I don't I don't think so first of all you know this city to make.
To make you have a movie speak about Wall Street obviously we're talking about a broad spectrum you have a financial services -- -- we kind of a very what does that David Lee.
You know your question with about Citibank and I'm I'm thinking in terms -- Q what I would call your brokerage firms.
I really don't see -- changing dramatically you know the banks traditionally.
I have always been low paying and they're -- raises salaries I guess it's good for the bankers.
And if they're not gonna compensate their their various.
Sales people for being overly aggressive that you will love being.
The big -- but I mean I guess -- it -- industry specific.
Problem for them but I think overall.
I don't see I don't see Wall Street necessarily.
Raising their salaries campaign smaller bonuses but in the end of the day.
People are gonna get compensated for what they do one way or the other and I don't see an overall.
You know it may be a -- does -- make five million baby makes four million but skilled people we take a look at the end results we don't look at.
What got him to that point you don't know how much revenue.
That particular person might have generated for the firm that he works for it could be quite dramatic I mean -- four million dollars.
Could be maybe 10% of his -- this is maybe maybe generates forty million dollars a year from Goldman Sachs right -- Morgan Stanley have.
You know you gonna have to pay that guy otherwise you know what he's gonna leave and go what if somebody else.
The latest the raw numbers might do throw some people on our viewers just -- -- -- most people -- Nicklaus of fifty grand a year and I you know -- just -- strictly a true.
But does it matter well it matters in the -- -- I do understand that it's very difficult for the average household to say.
To believe that there are people who simply wouldn't do their job for the 2000 dollars out.
Mean I do understand why that would be yeah hard thing to get your your head around -- but in it you see it every single day.
In a subset of people I do think what's gonna happen and this is totally aside from this city -- policy.
But what's what's already under way is a recognition that the median performer.
That all these firms and in the -- years was way overpaid and that's true that's all that's that became more true we saw him and have.
Not and it actually pervades the entire institution for cost centers in other words people are producing revenues and the other thing about these companies is.
I talked about before they -- their bonuses on a quarterly basis.
They simply pay out almost exactly 50% of net revenues.
And compensation no matter what it was a wonderful year or not a great year yet so the shareholders never get a book a little bit of a bomb.
If it was an extra good year.
It's -- always goes into the picture.
A lot of times -- and we not to be.
Defending this Wall Street model -- they bring a lot of the criticism on themselves but good enough for solo home and that's that its antennae on what I always going to have -- last word on an Ottawa the last wherever it.
But but that that would that would get made -- -- that would rivers made the shareholders.
I think that one of the beneficiaries will in fact be in public companies will be -- care of -- because there will be.
That's money pay out and compensation that we can -- -- -- -- more and more money for the shareholders in these companies.
That's a lot and that's plus OK candy thanks as always talked against him.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- But we watched you play with the big board again on the news channel it's doing pretty good job thank you appreciated you fluently.
Note the sound of both the theater.
Mike thanks very hip -- US -- but it will not seeing that you can you get an answer yes.
I think you might.
By the -- -- next and that's -- -- fun that you missed for the next when you're gonna hang out for you you're gonna wanna be here.
I like this next as an interesting one.
Are -- getting an unfair advantage with the -- must plan over men.
And do we really care there a couple of.
How quickly dollar viewers why she got to -- by the comment board right now how would you define.
Me and section.
Recession but man session live -- -- that means you think about that -- has worked really talking a little bit about.
What's happened to the different genders during this recession in session you put on the board.
Manson actually panacea to well I mean I think that a lot of people what I mean that the numbers speak for themselves and that more men have lost their job right during the recession.
You know -- can you talk about manufacturing industries like motive financial services.
Where is the places you're seeing growth are places like health care and education which have more women working in them.
Then some other industry.
The question is -- -- that just eleven right now there was a lot more jobs those sectors like the auto sector that had an employee -- in Nance says that is.
At what some would say that's the natural progression of this recession -- other say.
This is and this is dead on purpose maybe.
Christina Sommers is a resident scholar at the American Enterprise Institute a casino -- would be your thoughts about this man session you know what do you think about this.
Out between the genders.
Well since the recession began in December of 2007.
We lost about five point seven million jobs.
80% of them weren't wearing men's jobs -- and there's an economist mark Perry at the University of Michigan.
Who calls it.
The man session and every periodically he would update his website -- -- and say the man session continues it's getting it's worsening.
And so it the what I found interesting was that this wasn't really mentioned much in the media that we -- seeing and had this generation.
Of sectors of the economy where that employed just vast numbers of -- primarily blue collar -- Let me study there because we actually a -- report bad that we get a half ago on Fox News on as the biggest threat the graphic that shows.
The amount to about the -- unemployment rate for men and women it's drastically different and I would think that she's just going to break we should care.
If there's a big difference in the genders because manufacturing is important to.
Of course our economy and it that is really matter what -- there right Christine day -- it has to do with the sector being important and if more men lose that then -- I bet that's it back -- that I have.
-- right issue right that was a side issue but I think -- -- that president elect Obama in November December.
But as many -- people looked around saw what was happening he had a very good idea.
That might of worked which was he had this idea of a shovel ready stimulus program.
Two and it it was going to be modeled on Lincoln FDR.
Jobs program in in order to higher construction workers and and get the manufacturing.
Based going again and he talked about this a couple of times he talked about electrical grids and dams and roads well feminist.
Leaders and activists and professors heard dams and grids.
And they were annoyed they said the fact.
And they were very upset that the president's that -- they'd be believed he was proposing.
A program which they called macho.
And they didn't like the expression shovel ready they called testosterone Lleyton those -- the words of Kim -- at the national organization for women.
I just want to point out there was a very orchestrated.
And and elaborate campaign.
To hijacked the jobs bill.
And they did it.
Do you think your basic point here is that the women Scripps national organization for women and others came in and as you said.
Hijack this stimulus money taken away from it was intended to be spent.
And spend it instead on their quote unquote pet projects the administration would argue in fact we talked some -- the vice president's office today did argue.
That you know there's still billions upon billions of dollars going into.
Construction projects -- 48 billion I think is the number that they gave us today that it.
-- it will warm moving forward on all fronts we want to stimulate jobs in construction shovel ready projects for it.
Infrastructure and what have you just as we talked about but we're still gonna work to -- health care and education and all the rest of.
That's fine but so far -- the construction industry has seen very little of this money.
There was an excellent article in the -- Associated Press where they sent out six reporters a week and a half ago to find where this money being spent.
Most of it is gone towards what the feminists called the human infrastructure they want -- jobs for social workers librarians it.
Government workers and and state workers -- for -- get nothing against those programs that this was meant to be a stimulus bill.
For for areas of the economy that we're in great distress and what we ended up with as a kind of grab bag of reasonably you know and it wasn't nice -- in some cases important project but not what it is intended to -- Because the women's groups have really held this captive to there.
-- -- -- stay -- meant to be a teacher work in health -- as a doctor nurse or anything.
-- anything no I don't know of course.
And -- -- that women could have worked in the construction jobs you know you can say that the fact is that men and women are not exactly the -- they do work in different.
Different sectors and right now it happens to be the sectors where men are employed.
That are under great address and then don't have.
All these dozens of advocacy groups in Washington looking out for their interest and all of this is happening I should say at the same time that boy's.
I have never been doing you know worse and they just not keeping up academically.
There's a huge degree gap as well as now and an unemployment.
You know I do it is hard at getting really talked about that that the battle of the -- it's hard not -- -- to get and that note that there is like with girls vs boys that -- -- -- keep in mind is that.
You know and then it.
For all it takes a gender equality still are the predominant earners in the household and we have all this season housing crisis and otherwise we forget -- of the domino effect.
That's in his caddie still is -- more men are losing their jobs in the manufacturing sector will what does that mean.
Ready for that the housing market and the economy -- -- -- the manufacturing sector it really does kind of on the shoulder of the men in this communities and it is it that it's a question -- about where they can jump back -- if we don't.
But with we don't they'd start -- -- is new projects because of where where is the ground.
Where's the growth and -- the infrastructure is critical to the future of an economy.
And it did it get hit that could have been strong bipartisan support you could done several good things at once employed a lot of unemployed.
-- the contractors and and manufacturers as well as -- built up critical.
You know it infrastructure for the for the -- then another that happened it was just in the bill was watered down.
And as I said taken over by these groups and what's also very sad is that.
There's that right now.
There's there's probably no way to go back there was a little window of opportunity and you where they write might have been able to jump start the manufacturing -- we've lost I think confidence I was advocate groups that DC -- -- not national organization oh.
Obama is saying one thing we -- not -- like it better myself of that.
-- and I consider myself a feminist but that doesn't mean you don't care about -- yeah yeah and her bit at their fathers their Brothers their friends that -- -- in trouble -- our -- in this together -- extra -- and it -- -- appreciate your perspective very much on this topic we'll check back in with you.
-- is gonna -- build a bridge later and there with our.
Well you know.
I thought I was that was path anyway it's outfit that -- -- -- it right we'll see tomorrow and we're --
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