Also get a pros take. Bob olstein will join us live and exclusively in a couple of minutes. A list of predictions for 2014, and naming stocks that are his best value plays. Also, get this. Jpmorgan has been fined 2 billion for not figuring out that Bernie Madoff was a fraud. 2 billion. Wasnt that the governments job . Why is a private bank facing consequences for allegedly turning a blind eye and not government officials who were asleep at the wheel, obviously, at that time, during the decades of deception . Closing bell is getting into that a little bit later in the program today. Stick around. In the markets, take a look at whats happening. Diversion across major indexes. Dow is negative. Less so than session lows about noontime. Nasdaq is positive helped by twitter, tesla. S p 500 up about seven points sorry. That was the nasdaq. That would be up a bit. Im sorry. Now down about one point. Twitter. While i was gone, it went to 55 a share. This is true. That is unbelievable. Lets talk about todays Market Action. Joining us in our closing bell exchange, Heather Hughes from sun america funds. Michael yoshikami. Sam stovall. Jonathan brodski. Rick santelli. Michael yoshikami, everybody is trying to come up with a reason for the selloff. Dont you think its simple profit taking . I certainly hope so. I think thats what investors should be doing is taking profit. Theres nothing wrong with a little profit and paying a little tax particularly given how far the markets have rallied at this point. We have treasuries at 2. 8. That really suggests maybe the market thinks quantitative easing is, in fact, going to be tapered sooner than later. I think it is profit taking. I think thats smart. Thats what were doing. Michael, youre saying here that you think this softness illustrates that growth wont be as strong as expected . By all indications, whether its the retail sales report this morning, recent reads from other sectors of the economy pointing to momentum in 2014, most people are saying the opposite. Heres something very, very interesting. If you look at retail sales, why is why are retail sales good but retail earnings bad . Because consumers are buying lots of product. But its very low margins. For consumers, look at costco earnings. What that essentially means is if youre buying the stock market as really a gauge of what future earnings are going to look like, and retailer stocks are already showing that margins are compressed because shoppers are more cautious. Thats why i think you can have both of those things coexist and have slower gdp growth going forward. Heather, you know, as the Economic Data come in a little better than expected last last weeks jobs report, the argument goes maybe the fed will be inclined to taper sooner rather than later. And you say thats a lot of bunk here. Yeah. I guess so. My word, not yours. Well, thank you. The consensus tends to be, look, i had a meeting with economist rubini. Hes met with many fed heads. I do take his opinion. Not lightly. He says the consensus is for a january taper, not next week. Although, yes, weve had positive macroEconomic Data as you alluded to. Inflation is still not yet there. And i hope they taper sooner rather than later, but i just dont see that happening when we havent reached our inflation target of 2 . Were still 1 . I agree. Jonathan brodski, weve got people focus on the composition of the fed next year as well. The fact well have fisher, lacquer, i believe, the two, more hawkish rotating in and being voting members. Perhaps the bigger headline which is that Stanley Fisher might turn out to be the vice chair here. Are you reading a lot into that . Do you worry about what that means if they sort of push the fed away from Forward Guidance or toward some slightly more hawkish positioning here . Our perspective is that given the situation with tapering, were recommending that, you know, theres a shift from some of the higher momentum type of securities that have done so well, stocks that have really performed extraordinarily this year, to Higher Quality names. Names that, perhaps, havent performed quite as well. As a defensive move in case there is a more hawkish type of a situation going forward. Sam stovall, get this. Im going to ask you a fundamental question. Through all of this, i mean, were going to be dealing in a little bit here with some of the high profile Fourth Quarter earnings. Warnings weve been receiving lately. What do you make of that . Is this going to be a tough quarter for reports when the time comes. Historically the Fourth Quarter is the most volatile quarter. Because basically thats your kitchen sink quarter. When companies dont have a good year, then it basically pile on in the Fourth Quarter, sort of set themselves up for an even better year over year change in the coming year. Our expectation, s p capital iq consensus numbers are pointing to a 6. 6 increase in operating results in the Fourth Quarter. And most of the cyclical sectors, Consumer Discretionary, financials, industrials and tech are likely to show the strength in this coming Fourth Quarter. Speaking of the kimpen sink, in just a little bit well get into this very phenomenon and whether youre seeing a lot more of it right now than usual. What that could mean. Back to foint about Earnings Growth, 6. 5 for the Fourth Quarter sounds reasonable. Whats the expectation in terms of consensus estimates for the full year 2014 right now . Where do we stand . For the full year 2014, the number is about 120 for the s p 500. Thats about a ten plus percent increase on a year over year basis. We were sort of at that range this time last year. And now it looks as if were going to be seeing growth closer to about 6 . I think most of the strategists on the street are sort of paring down that 10 to 11 expectation and saying something a little more close to 6 to 8 is realistic for next year. Again, if youre just joining us, this time yesterday the market was falling out of bed here. Were not by any means here. Art cashin just walked by and signaled weve got no bias either way to the buy or sell side as we go into this final hour here. Well keep an eye on this and see how we go here. Rick santelli, all three major treasury auctions are in the book. Rather soft demand this week. What happened . I dont know if it was that. Definitely looking at mediocre 10 and 30 year options. I think why should a bond investor jump into these auctions when they could observe in front of the fed meeting and play in the secondary market with all the issues up in the air, all the big numbers on Bond Mutual Fund redemptions. I think this will continue. But even a bigger story. I like the fact were talking about mr. Fischer. At one of the areas i really enjoy with mr. Fischer is that when asked about things like transparency and Forward Guidance, he gave the same answer that ive had four santelli exchanges on. That is, how can the fed be transparent . They dont know how its going to turn out or how theyre going to orchestrate it. I really think hes an interesting person. Hes also the mit modeler. Im not so sure how happy i am about that. If you look at interest rauts on the long term charts were show wk hovering at the highest yields since midseptember. Were not far from comping all the way back into the summer of 2011. At the end of the day all of the people on the panel, come on. Stocks are going down coordinated with budget, fed meeting and taper. To me the handwriting is on the wall. Theres one out of two markets that just hasnt accepted reality of normalcy of Interest Rates. Thats the equity markets. Stanley fischer, one of the great things about him, he taught economics to half the people on the fed including ben bernanke. Its just amazing. He was their professor. Mario draghi of the Central European bank. Heres a picture. You can see just for a couple of examples, michael woodford. Christina romer. David romer, her husband in that picture as well. Theres ben bernanke. Theyre all with, you know, theyre with Stanley Fischer. I love that. I wonder if he was a tough grader. Wheres Rick Santelli . Youre not in the picture. I was looking for you. Exactly. Hey, rick, im surprised when you said only one out of two markets doesnt believe whats going on here. I thought you were going to say the bond market. I thought you were going to say the bond market doesnt seem to be fully onboard with the idea no. Youre always saying the bond market is the only adult in the room. I think they push the fed. Absolutely. The bond vigilantes are back. Heather hughes, what are we doing with this market . You want to buy anything . Finding anything to buy here . I think right now advisers, as you said it, it seems were just sitting on our hands right now waiting for some sort of direction. I think a lot of the rebalancing will occur hearing from advisers the first week in january. For the time being, were just digesting. Look, were up 24 this year. A pullback in the markets gives us a chance to reallocate. But two themes going into 2014. One, you want to tighten up on duration, of course. Even though rick had mentioned that the bond markets may have already priced in a taper. We do know ultimately on the long end of the curve theyre headed higher. Number two, stick with your longterm horizon. Whatever youve discussed, this is my outlook, you know, every day i need gps in my car. I cant get around anywhere without it. Im a female. I cant drive. Hey. Im all right behind the wheel. You drive in . You dont take the trains in new york . Thats your problem, ladies. Youre using that gps. We dont ask directions. We dont need them. Its the beltway around here. Theres construction. Theres roadblocks. But the one thing that never changes, keep the end in mind. Whatever your end game is, talk to your adviser and keep that plan in 2014 regardless of what the fed does. All right. Good idea. Thanks, guys. Great to see all of you. Really appreciate it. Thank you. Heading toward the close. Kind of Holding Steady here with about 50 minutes left. Dow down 78 points. Again, we were down about 120 at the low of the session today. Coming up next, were going to talk about one major red flag for this market that no one has really discussed enough yet. What it could mean, whether its signaling a new year that may not be a happy one for investors. Also, hilton ipo. Big ipo today. One of the few bright spots on wall street. Shares spiking on its first day of trading here at big board. Should you check in or check out of this stock . You knew we were going to say that, didnt you . Stock brawl on Hilton Worldwide coming up. The pope is back on the Business Front pages today. First criticizing capitalism. Now pope francis chiming in on executive pay. That story and healthy debate is coming up. Youre watching cnbc, first in business worldwide. [ female announcer ] theres one thing daves always wanted to do when he retires keep working, but for himself. So as his financial advisor, i took a look at everything he has. The 401 k . Insurance policies. Even money hes invested elsewhere. Were building a Retirement Plan to help him launch a second career. Daves flight school. Go dave. When people talk, great things can happen. So start a conversation with an advisor whos fully invested in you. Wells fargo advisors. Together well go far. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. You stand behind what you say. Theres a saying around here, around here you dont make excuses. You make commitments. And when you cant live up to them, you own up, and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. Welcome back. Courtney reagan for a market flash. Shares of Marsha Stewart living omni media. The stock is on the move here up more than 9 . The company laying off a number of employees today. While its less than the 100 reported by other media outlets, an exact number cant be confirmed, most of the positions im told are in media, ad sales and marketing. Im told mslo is realigning talent. All a result of managements reevaluation of the company structure. Trying to get rid of some of these duplicate positions. Kelly . Thanks very much. Well watch that one. Market shows signs of weakness, one thing gaining momentum, companies with, get this. Negative preannouncements on earnings. In other words, negative relative to what the market thinks. One important fact suggesting the ratio of negative to positive preannouncements right now is sitting at an all time high. Lets talk about it. Is this a big worry for investors . Nick rage. Our own jeff cox joining us as well. Nick, you think this is overblown. Why . Its been a very bad gauge just to look at one ratio of negative to positive and then draw conclusion that its going to be a bad earnings season. This indicator has been signaling negative things about upcoming Earnings Seasons for the last two years. The one thing it does, tells you the number of companies wanting to doesnt tell you the magnitude by which theyre cutting estimates. I dont mean to interrupt you. Im excited about this topic. Excited about a lot of things in the market. What caught my attention, were not talking about ratio of two or three to one as weve seen in the past. Were talking about 11 1. My jaw dropped. I had to read that 12 times. Lets look at the magnitude, kelly. Estimates during Third Quarter earnings season for the Fourth Quarter dropped from 12 to 6. 6 . There was people during the Government Shutdown that thought that was going to go to zero. Since late november the Fourth QuarterEarnings Growth estimate has actually went up ten basis points to 6. 71. The 11 1 sounds flat. The magny nuitude is not there. I suspect youre taking the other side of the trade . Nick makes a couple of points here i think, okay, earnings are still going to be positive. When you talk about, you know, the magnitude of this, ill give you a magnitude. The beginning of the year Fourth Quarter earnings were supposed to gain by almost 18 . That number is down to below 7 now. Weve cut basically by twothirds the expectations. Yeah. But who was really expecting earnings to grow by 18 . Come on. Somebody on wall street was, bill. Oh, please. Jeff, thats been going on for the last two years. Each quarter the estimates get cut by a lesser and lesser amount. Thats the game we play. We lower the bar and we say, okay, heres, you know, well beat this lowered bar. I think that the dynamics are a little bit different here. Because we have, you know, welcome to taper town, here. I think companies now are starting to brace for the reality. I think Rick Santelli made some really great points in the last segment about facing the reality of a world where qe is not where it was before. Where you dont have 85 billion a month in liquidity coming in. Companies are going to have to adjust their expectations. Theres going to be currency pressures. Theres going to be Interest Rate pressures. We have 4 trillion in corporate debt thats going to mature over the next four years. About a trillion dollars each year. Things are changing. The Playing Field is changing. Jeff, thats absolutely true. The problem is nick, this is where i sympathize with what youre saying here. Because this indicator, i mean, theres no one on wall street who doesnt know right now that that ratio is sitting at 11 1. Weve barely moved on the market. All of these in other words, h is all effectively priced in. Either no one really cares, and this is just a giant game corporations are using to lower expectations, or were all about to get hit in the face with a massive readjustment of this market relative to what the actual earnings let me add one more point. Kelly, you just nailed it. The fact they mentioned last segment, sam stovall mentioned the Fourth Quarter usually gets this kind of action because it is the kitchen sink quarter where they throw in all the bad stuff at the end of the year. Isnt it sort of different this quarter, nick . Well, kelly just nailed it. The street doesnt care about these Fourth Quarter guidance because they know the way the earnings game is played and manipulated the companies lowball estimates. Jeff alluded to that as well. What we shouldnt care about are fourth quart revisions. In our model we dont factor in Fourth Quarter estimates. What we should care about the is rise in interest raurts and how thats going to impact First Quarter and Second Quarter estimates. Those are going to be much more determinate of stock prices. Should we care this is getting egregious . Its not just some companies coming out and lowering the bar. Pretty much everyone is. Surely weve got to catch up with that somewhere. Its a magnitude, kelly. Theyre not lowering by much. They were lowing it by a significant greater amount last year than this year. Do we think this is all some kind of big coincidence, though . I think you raise a great point, kelly. Its frustrating to me, too, you have companies wheres the honesty . Wheres the integrity in this process . But, you