Feds final meeting of 2017. Jim lebenthal, the question is this will we look back and say this marked the beginning of the end . I dont think so. First off, this particular move is well telegraphed so the market expects it and the question of what will upend this market is any time you see Profit Growth in any way interrupted, and on that front its hard to see anything coming up look, you wont have any news until the middle of january or early january when Companies Start to report and they are more likely to be positive, particularly if a tax bill does get inacted even if theres negative news. They will be looking forward and feeling good about the tax bill. I dont see the fed on this rate hike or anything they are doing in 2018 overcoming the Profit Growth they are looking for in 2018. Joe, a consistent path of tightening does that mark in any way the beginning of the end of the bull market, one of the greatest that weve seen, that has raged since the depths of the crisis since now, quadrupling the s p 500. A normalization of rates has been long overdue and its evidence to suggest that clearly Asset Classes themselves are getting back on where they should have been this has been a very long recovery, a strong recovery and a good recovery. So i think the fed is normalizing. They are doing what they should be doing id be more concerned if they actually had a pause with what they have done here over the last 18 months steve weiss, same question . I dont think it slows the market down march, you know. Three or four rate hikes is not going to slow it down . Other than what the market would normally do at this point in its evolution, so three hikes are baked in i believe, most people believe there are three hikes, at least the ones i talk to just depends if they quicken the pace and if there are 25 bipz each ti each time thats okay. As long as we see an appetite for u. S. Treasuries, as were seeing today, i think its going to stay. You have to at least somewhat consider, josh, maybe the unintended consequences of a massive tax package, a fiscal stimulus plan. Lee cooper man certainly big in what the impact of that would be as he told us just late last week heres Lee Cooperman i think the tax package makes longterm sense. Shortterm i think its dangerous. We have a reasonably rapidly growing economy. We have a tightening regime from the fed. We have Balance Sheet normalization by the fed i dont know that we need the additional fiscal stimulus injected to the economy. By dangerous what do you mean, what could the fallout be . A rapid escalation in Interest Rates which the market is not prepared for. Are we considering this question as much as we should be well. That seems intent on tightening rates. Yeah. For the string of 2018. At the same time youve got a massive fiscal stimulus plan at the same time the fed is rolling down its Balance Sheet. Right. While one could offset the other, it would be the optimistic way to look at it the good news for people who have the same concern that Lee Cooperman does its not going to boost the economy. It will boost stock market, and it will be great for, you know, a lot of big corporations. Well see if tends up being great for everyone else but probably no. Weve got a couple of test cased where we can definitivelily point to and it didnt spell over the way it was sold to the populists. I dont think that this is the biggest risk and i want to agree with what show and steve both said and point out that the xlf ratio chart with the s p, so the banks priced in the overall market is the way to think about is the at highest level its been at since 2011, and if that continues its a positive and its critical actually for this bull market to extend into 2018. That leadership broadens out away from just technology, and the banks would be a great candidate to lead that charge so right now youve got the xlf up to on the year. The s p is up 21 , and then if you actually think about having sectors like industrials and financials lead us into the new year its tough to look at that kind of price action and say this is the beginning of the end last thing, stocks and rates have risen since 1926 at the same time. About 40 of the time when you look at on a monthly basis in the 1950s rates were going up we were normalizing after world war ii and stocks had a gangbusters decade same thing in the 1990s, rates were generally rights, and the danger that steve points out if they get too quick i think is the real danger. So far they havent shown an inclination. Greenspan did 13 rate hikes from 04 to 06 and it was five or six too much thats what i would be worried about, not the trend. So liesman, the danger that quote, unquote, Lee Cooperman speaks about, how much are you thinking about that, the unintind tended consequences of the tax plan rapidly rights inflation and a fed that becomes extraordinarily reactionary as a result im thinking about it a lot and i think the way to think about is in terms of the changes of a policy mistake, okay. Its not that the fed would raise rates in the face of a stimulative tax policy its that it would raise rates too much or too little because higher rates in the face of higher growth, a higher cost of money makes sense. Its correct for the Federal Reserve to do that you would expect it if it could take a little bit of the froth out of the market. That would be a positive thing perhaps extend the real, and i think what the fed has shown itself to do unbernanke, yellen and under powell is that its going to be exquit ily attune to what the market is telling it and what the economy is telling it, and i think those two things will guide it to keep it from making a mistake however, a stimulus coming down the pike at full employment does create risk that the tax plan itself is potentially a policy mistake. The tax plan itself thats interesting and others, have you know, mentioned the prospects of problems as a result of doing it now. Maybe you dont need it as much as some are making the argument that you do. Lets check a couple of boxes. They bike this week, check they do, but if i can point out. Theres three folks on the fed that dont want to hike rates, brainard, evans and kashkari i dont think they dissent because its yellens outgoing thing but theres a contingent on the fed that dont want to hike right now because of the coming tax plan. What do you think yellen wants to do . Shes lowering the Balance Sheet and shes raised rates pretty good accomplishment by the way for the person who was criticized for being quite so dovish, for the record all the people, not at this table, were criticizing her for being dovish shes the one whoraised rates. What about the other boxes next year . Wall street is tossing around three or four. All of those projections will have implications for stocks whats your best guess on a powellled fed in. In a sense from my stabbed point youre answering your own question if the street is tossing around three or four, i think its really more two or three, it tells you that the street right now is trading at current stock levels, there you go those are the percentages for the hike 96 for the first one and 61, 52 and 24 for the third hike and ive got three hikes. Let me just finish the thought. The market is trading with that right now with that expectation, so it would be okay as far as the markets are concerned today for the fed to hike three times next year. I want to go on this because i think this is important. Youre talking about where the averages are. Doing your best to figure out what the market is pricing in, but there is a great deal relatively speaking between what analysts are saying. A lot of people are saying three to four hikes. Present of people are saying one hike joe, you pointed out something thats very good, if they slow off the pace that could spook the market if they go too fast. Can i add another layer of investor in that theres the investor who some are still trading with the armageddons of the fed exit, right . There are still people who thought and think for a long time fed getting out of easy policy and meanwhile the fed thinks lowering the Balance Sheet and raising rates and the world as i understand it are Still Standing saying that for two years. Still a trade on that. Your question which is the central question, it doesnt come home to roost this week, but sometime near the end of the first quarter. They may turn around like the frog in the water kind of thing. Exactly. As we start to put horse trades down. If you had robert sthuler on, he would suggest that thats baked into todays valuations. Let me ask a different way. Jeremy siegel who understand that, too. He would know that. Do you think that the ned is the biggest risk to the stock market in 2018. No. The fed is reactionary to a large extent because their forecasts have always what is the biggest risk the biggest risk is the economy that the fed has toss react to and its wage growth and inflation and if wage growth ever takes off were at relatively low unemployment. Right. But if that happens does it increase the risk of the fed i think the bigger risk is ourselves. Youre making the same case. Thats always a risk and theres been only three times since 1950 when bonds have had negative performance, the tenyear and when the markets had negative performance in the same period, so we know bonds or reassume bonds that yields will rise. Look at way the market is reacting the long end is crunching. I had a perfect forecast for the fed, an abysmal forecast for the long end because i didnt come in with 70 basis points of spread tightening in the 2s to 10s. I dont know who predicted in a. The last three to four years theres been times when the street expected the Federal Reserve to normalized rates and they didnt, and the market gave the street gave the Federal Reserve a pass in 2018 if that happens, there is no way the street gives the market a pass. What does that mean, joe . Not getting a pass. Because at that point the street, the investors, they say, okay, what is it that the Federal Reserve sees thats taking them off the traject riff continuing to normalize the Balance Sheet and rates . There must be something of concern you know what, lets bring in Jeremy Siegel right now into the conversation live in philadelphia professor, good to see you once again. Happy to be mere. Youve made the argument that next year is going to be more difficult to make money in the stock market. Yeah. Is a more tightening fed the principal reason why or the main reason if you go with the three increases, that brings the yield on cash to 2 . When have we last seen that . That actually for the first time in a decade is higher than the dividend yield on the s p. Now im sure the tenyear will move up somewhat, but, you know, people are going to get 2 on cash its going to be a little bit more difficult for the stock market by the way, no one mentioned i think there are political risks next year. There are midterm elections its very possible house or senate or even both might turn democratic which could make any, you know, further trump legislation impossible now thats one reason they are going for this Corporate Tax cut. Honestly, i think thats built in i think thats one of the big reasons weve had a big rise over the last six weeks is the tax cuts so i dont know how much were going to get on that. I mean, the experts say maybe 6 on the s p 500 thats another what, 5 . Well, weve had that in response, so im im thinking it is going to be more difficult next year. I wouldnt even be surprised to see a correction next year which we havent had for a while. Let listen to a couple of very smart investors whom i spoke with late last week on their expected, professor, for 2018 because it sound like both of them differ with your perspective. Lets listen and we can react on the other side. Part of it is all the news has been positiving right, so when you take a look at the economy, the are economy is doing well, and everybody is taking that positive news and is continuing to buy equities, so, look, i think it can continue for another six months or a year becausering is good. I know weve had quite a big run, but i think we probably have another 10 to 15 ahead of us next year. The tax bill may give us a little bit more of a bump but its still, i think, you can get double digit returns out of stocks. All right professor, for your benefit, the first sound you heard was from mark lazare and the second from scott minor, 10 to 15 ahead next year. You want to take issue with that its amazing that id be the least bullish person in the world. Were marking the irony when that last happened, but i think weve had quite a returns and, you know, we cant keep on getting 200,000 jobs youre right no one knows when that inflation is going to be ignited were at 4. 1 at this rate we go below 3. 5 by the end of next year to 3. Theres never been a time when that has not accelerated wages with you does mean a challengefochallenge for equities i dont predict a disaster but a breather. I agree with the professor 100 boston i think thats how it plays out and at some point next year, and i thought he would have done it already, draghi is going to tighten also, so you go from global easing to global tightening, and thats a risk. And the japanese are showing no indication that they are going to be tightening any time soon no, no, and they have got a much longer way to go. Isnt draghi just going reducing the amount of qe next year. Yes but thats not tightening, right. Hell move to tapering. Not like a 2019 event i think before they tighten rates over there. Youve seen the momentum in similar economies much quicker than our momentum but its not an isolated situation. Prove vore, if youre doing 4 , 5 nominal on growth, 2 has on cash is not a crazy number, right . Its a fairly normal number. Its still a little bit stimulative. Let say we get 2. 5 growth and well do 1 , 2 inflation on top of that. 2 cash is a good environment. Yeah, still, if we get 2 inflation, we get up a little bit. 2 cash is still zero real. Right. But weve had negative real so these people are preserving their capital. You cant have cake all the time and still maintain a trim i agree with you on draghi. If you fake a look at the european pmi, they are really hitting highs. I think they are going to be a big year up on europe and hes going if not taper certainly announce an end point for his qe and then youve got a new game in europe. You can talk about what the Central Banks are doing and what the economies are doing, and to me the synchronized Global Expansion is a big story, and its always a question to me the extent to which the market is even able to conceptually price in what it means for say, for example, s p earnings if they are growing in asia and europe and in the United States because at the end of the day whats going to matter here is what the earnings deliver, and if they deliver those earnings in the double digits or the high singles because they are getting a kick from global growth, i think thats a big story. Prove source, are you more inclined at the levels we are than based on your opinion of where stocks are going to go in 2018 to sell stocks at these levels or to continue to buy well, i i mean, my feeling is theres going to be a pause next year. I mean, you know, i could say zero to 10 . People ask me, and i say probably the mid Single Digits certainly thats better than bonds and still better than cash, but one also has to remember, you know, were at 20, 21, price earnings ratio were at high margins, and can i justify that in a low Interest Rate environment, but, you know, gdp growing at 5 , i dont see how that continues to generate a double digit Earnings Growth at these margins and these levels so i think well have a slowdown i mean, 2017 was great over 2016 big depression 16 because of the Energy Energy has come back, i dont expect that really to expand that much more in 18 so i think well really have single digit Earnings Growth next year in a rising Interest Rate environment and that will put a pause to the big bull market. Again, not a crash but a pause in my opinion. Speaking of pauses to bull markets lastly hand maybe most importantly, professor, your quarterback is out for the season now are you as bullish, or are you bearish on the eagles super bowl chances . It is heartbreaking i love the eagles. My son and i have season tickets. In fact, he was in l. A. For the game and called me afterwards and a mixture of certainly elation that they won but such deep disappointment, you know. Its been 52 years weve never won a super bowl we may have to wait a little longer. Yeah. But im not giving up yet. All right i figured you would probably have an opinion. Pittsburgh is right across the state if you want a super bowl winner. I know. The other conference though. Thats good to see you as always thank you very much. Well talk to you again soon. Jeremy siegel. Steve, thank you as well pleasure. Josh lipton with breaking news in San Francisco for us scott . Reporter scott, it is official apple is indeed buying shazam. We are thrilled that shazam and its talented team will be joining apple. Since the launch of the app store shazam has consistently ranked as one of the most popular apps for ios and is used by hundreds of millions around the world across multiple platforms. Apple music and shazam are a natural fit sharing a passion for Music Discovery and using great music experiences to our users. We have exciting plans and we look forward to combining with shazam upon approval of todays agreement apple is not disclosing how much it paid but shazam raised 1 who million from investors including sony music and apple looking to build out and invest in that Music Service. Apple Music Service has 30 million subscribers as it takes on rivals like spotify. Likely a drop in the bucket whatever it is, considering how much cash apple is sitting on these days yeah, absolutely. Apple sits on a Cash Mountain now of some 270 bi