Course of grants Interest Rate observer, noted fed critic with his take on what the fed is hinting at these days and sounding the alarm on the petrabras scandal. Hes coming right up. Also a closer look at the red hot commercial Real Estate Market here in this country and whether its already becoming too hot. Leading towards a dangerous bubble. That could and might sound familiar wreck havoc on the economy if it pops. Investment of china, russia and now canada. A special report of where things stand in this space and what it means for every investor out there. This is so surreal to me. Making a bet on highend marijuana. High end, right . Got that . Bob marleys family is now lending his name to a new brand of premium cannabis. Aimed at the discernible pot smoker. Now, i mean discerning . I guess its discerning but not after a couple of doobies. Not much to discern. I came of age in the 70s in california. Do the math. That is whole new world and frontier. Well talk with the private Equity Investor working with the marley family and putting an awful lot of money into this. I think jane wells is right. Theres an east coast, west coast mentality split on this. This does not compute for you . I just no i hear you. The dow off 19 points as we mentioned after the Federal Reserve minutes hit about 2 00 eastern time. The s p off 5. Nasdaq off to the tune of 25 and the japanese yen to talk about, as well. Hitting a new recent high. 118. Here the real focal point today even into 2015 as the outlooks come out is the u. S. Dollar. Lets get to the panel. Margie patel, keith fitzgerald, jack barusian and we have rick santelli. Thats steve liesman. Well did to him first and was going to mention him less. Rick santelli of chicago will be joining us shortly, as well. Steve, how about hits, runs and errors, back story to the feds rather hawkish statement of last meeting . You know, i was really interested, bill, in how the market responded. First it rallied and then it sold off. I think thats em bemblem atti stuff going on. I think the fed wants to raise Interest Rates next year and whether Global Economic weakness or inflation too low than they expect is something to keep them from their appointed task of raising rates is unclear to the markets and you could see in the minutes the fed is struggling with the language of how to communicate to the markets about the next steps. Remember, we have enormously low volatility. What the fed was going to do over a long period of time ending qe is dialed in. The market understood. Tapering down. Then going to end. More uncertain where we go from here. Making changes to the statement. The way i think about it, pilots on the tarmac. Theyre ready to take off. Thats the direction. But a lot of talk about the clouds on the whorizon, the wins and whether or not they should delay that. Back to goldman and the view thinking that, frankly, the markets arent priced for the feds for the fed to raise Interest Rates. Margie, what do you think . What impact will it have . I think its going or the very hard for the fed to raise Interest Rates as much as they would like to find a reason and ability to do so. I think rates are going to stay in the same very, very low levels. I would say for at least through the balance of 15 and i dont see a way out of predicament to raise short rates. You dont think theyre raising rates next year . I dont think they are not able to based on inflation. Economic growth is modest. I think the dollar so strong if you raised rates the value would go through the roof and really compound the problems of the worlds Financial Systems. Keith, do you agree . Im absolutely of that school of thought. I think they boxed themselves into a corner. Theyre danged if they, danged if they dont. Theres discussion and indecision around the table. And this to me is not only pilots looking at the clouds on the horizwho vhorizon. Somebody asked for a map and nobody knows who has it. Isnt the angst right now, steve, let me ask you this, as they wrangle with what to say in the communications that they send out, isnt it just mostly about finding ways to communicate that theyre going to raise rates without being too disruptive to the markets . I think thats right, bill. I think what the fed struggled with for a very long time is notion of starting to raise rates, believing that the economy should have a rate of x at the moment without the market going further out and pricing in where the fed is going . Pulling forward when what they call the terminal rate. But, steve, they dont believe the fed today. The market doesnt believe the fed today. Thats the point. Im surprised the market the fed hasnt dealt more with that. Theres a big gap of the market and where the fed is andly tell you that theyre talking about this is a technical thing but it would be a very important innovation going to what theyre calling a Consensus Forecast around unemployment right. Gdp and the fed funds rate. The funds rate basing what the fed thinks is a byproduct of 17 different averages. Theyre discussing should there be a consensus rate that tells the market more specifically where its going . Maybe, rick, its a simple watching Inflation Expectations. The fed itself said this. We saw the numbers in university of Michigan Survey down to 2. 6 for the 1year, 5 to 10year and longer at the lowest we have seen in this survey. So, that by the way hit after the feds meeting and perhaps thats why the markets not reacting more hawkishly. Listen. I personally think that 99 of america benefits in a low inflation environment. Okay . Im not going into that. We dont have a deflation problem. Okay . We have certain Financial Assets that cant hold where theyre supposed to, potentially more in europe and japan makes sense pumping them up to areas they shouldnt be in the first place. In terms of the fed and pricing it out, listen. I dont agree necessarily with every aspect of the two pillars of the fed but inherent in that strategy or that dynamic is that its whats best for the economy. With regard to pricing issues, with regard to employment issues. But nowhere do i see an interpretation that its about market issues, about whether investors make or lose money. I understand its better they make than lose but i think that its much more simple than that. Theres a subsidy in the marketplace thats worked out definitely to those that are holding equities. And to remove it why do you think theres a gap im curious why the market doesnt believe the feds current forecast of where Interest Rates are going next year. None of the forecasts like a lot of street have been accurate and i say to mr. Hasias saying he doesnt think its pricing right, if the fed hasnt made up its mind what to do, how can we price it in . This is a childish argument. I feel like im on a cartoon here. Truly. You know . Im going to jump in here, guys. Somebody asked me if i wanted to price the fact of where kelly is going to live, if you havent decided that youre going to move, its a stupid discussion to have. Lets bring jack in. I want to agree with rick, bill. No, no. Okay. Wait a second. Youre a big fan of the fed. Do they have a credibility gap here . Not at all i got to tell you something. Jack this is doing what they should be doing. If anything, shes come out and said exactly what she should have said. In the statement today, if you read it, she said something that was very, very important. It was minutes. What is taking what is going on around the world is not going to affect or might not affect what is happening here. Do you know how big that is, rick . As big as shes making it up as she goes, jack. As big as chamberlains tombstone. The market is going up to steal a line of larry kudlow, profits are the mothers milk. Theyre making money. Corporations thats fine, jack. That doesnt sweeter, jack no. But doesnt change the fact wait a minute. Hang on, everybody. Hang on one second. Hang on. Hang on one second. Jack, lets start to you and then get peter in real quick here. Listen. Same question. We heard what rick had to say. Why do you think the market here if the conditions are as good as you say and the fed told us its going to raise rates or sees Interest Rates moving up next year, why doesnt the market believe it . Kelly, i dont know if youve noticed, one out of every five sessions is a new alltime highs this year. Im talking about where the market a move a day. Today and yesterday is all about fridays expiration. Im not talking about the stock market, jack. Im talking about the expectations of Interest Rates. Theres a wide gap of the pricing and the fed told us. Kelly, theres a huge problem and a disconnect of bond markets and the stock market. The bond market has been sending the wrong message now for a year, at least. And its that the credibility gap . No, no, no, no. The fed plays with academic mod els. Traders play with real money. Go with the guys making the decisions on real money a reflection of risk. Interest rates are a reflection of what somebody thinks risk ought to be and priced very, very differently. Keith do you then buy in this notion were going to have no inflation over whats essentially a fiveyear period or a tenyear period, that the appropriate level for 10year is 2. 35 today . And by the way what i think about the appropriate level is irrelevant. Because the other question is, the market is priced guys, put up the fed funds future thing. Rick, 50 or 60 basis points . And the fed is at 1. 4. So theres a big gap here exactly what were talking about. Thats what kelly is talking about. Compared to what baseline, steve . Whats the baseline . Well, you can look at any baseline. Put an up chart of the 1year. Theres no baseline. Janet yellens brain is the base loin. No, no, no. Where the market is. It doesnt matter. Why doesnt it matter . Of course it does. The fed is nowhere. Has the power and telling us one thing for the path of the rates next year, why then, keith, market traders in the m seeing they see little move and why do they tell us this . Because they do not have the certainty that they need to make the investments and take the foot off the gas. They have got to have protection above all else because the fed missed the crisis in formation and taken a couple of potshot that iss lucky and inflated equity markets and beyond that you have treasury problems, the world floating in debt, 25 of the world flat line Economic Data so they are simply uncertain as to whats coming out of the fed or any other central bank for that matter and theyre trying. And this is the picture were drawing. They might adds well be printing monopoly money. You mugs stand aside a minute. Margie, you are rolled over here on this one. Your view of the treasury market is they dont expect a big inflation, do they . Why dont you believe the fed . Because i think the fed is looking at academic models and not a changed world. Thank you. I think very little ability to make rates go up and i think the market recognized and a lest activist fed, less disruptive for the market is a driver for the equity market and the Corporate Bond markets. Lower volatility, better returns and i think thats going to draw the whats that mean a less activist fed . A fed and doesnt raise rates or a fed that goes back towards what will be considered a mor longer term normal rate . What do you mean by less activist . The fed doesnt have the power to raise rates like they did in previous cycles and doing nothing because they cant do anything. Well said. Thank you for an energetic conversation, everybody. On this big day watching markets here grappling with exactly this gap between the market pricing, what the fed is telling us. Dow off 25. Small declines across the other indexes, too. Jim grant, founder, editor of a news letter of his name, joins us exclusive. That will be coming up in just a moment here a. So, too, the weekly beat the street segment. How a fund manager is unperforming the benchmark and what hes buying these days. Act i. Scene 3. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. [annits working forny. New york state. Already 41 companies are investing almost 80 million dollars, and creating 1750 jobs. From long island to all across upstate new york, more businesses are coming to new york. They are paying no property taxes, no corporate taxes, and no sales taxes. And with over 300 locations, and 3. 7 million square feet available, theres a place that is is right for your business. See if startupny can work for you. Go to startup. Ny. Gov. Welcome back. New book is called forgotten depression 1921 the crash that cured itself when there was no quantitative easing. Which well talk about in a moment here. The minutes. Of the fed. Theyre struggling with what to tell the world about when they think its time to start to raise interestempathize. Its hard to be a central planner. Doesnt work. One thing that we have seen at grants reading speeches and minutes over the past several months an s a reference to the world outside. The fed read is purely domestic. They have legally no mandate to look beyond the 50 states but what increasingly we have read and my colleague evan especially caught this, what we have read is more and more allusion to difficulties outside and to currencies. So i think that the fed is going to be telling us that it is contemplating falling back on the worlds difficulties as a reason or pretext not to be so aggressive next year. Perhaps thats what the market is thinking about it its a form of tightening policy and in a way reacting to that very yes. But something rather new for them. I think that beyond next quarter, next year, is the fact that, you know, with this qe, with this 0 rates, this is a radical unprecedented set of policies and this virus of radical monetary intervention is in the body politic. One of the things in the back of the mind of the market might be what next time . There will be a bear market. A recession. What do they do in response . Not nothing. Right. And theres nothing in what they believe, nothing in the policies they espouse to do something, they might have, every time theyve intervened it is louder, higher, heavier handed. Now the complicating factor the bank of japan and the European Central bank in the opposite direction essentially. Yes. And, and these various minutes, excheckers and various Central Banks pressing the currencies down. The swiss of all people promise to print cars full of francs in response to the euro. The japanese made no secret of the fact they want the yen cheaper. Koreans gagging on. Ditto the chinese. Quite out of the mainstream of fed discussion is this drama with currency manipulation. And Interest Rate manipulation from the world outside. Your dissatisfaction with the way that Monetary Policy has gone is one of the reasons you wrote this book about what happened in 1921. Yes. In 2008, the great depegs of the 1930s monopolized the market. Ben bernanke could not get through the press conference without invoking the pea 30s and no way that he would suffer us to go through that again. So, more intervention. More socalled stimulus. More spending. More borrowing. Story here is one of nonintervention. The depression was 18 months. Beginning of 1920 to middle of 1921. It was brutal. Commodity prices the steepest and fastest decline from the beginning of the republic to that day and from that day to this stock market down 45 . Cocacola at the bottom selling for one times 1923 earnings. 1921. Why didnt the government do anything about it . First of all, nobody invented the concept of macroeconomics. Really. There were no Economic Data of much consequence. A great deal of Inspector General forns. It was like hong kong in the 1960s when a man on principle refused to let them gather Economic Data lest they try to do something with them. The government was in a fog of ignorance. A constructive fog. And they balanced the budget and the fed raised Interest Rates. So i mean, your premise in this book which i think as i said i think folks out there who are not fans of the fed as you are not will find this appealing because this is a time frame where there was a sharp, quick recession, very deep and but it led to the roaring 20s and we know. The hero is price mechanism. Adam smith. But heres the question that will never be never be able to answer. What would happen if ben bernanke did nothing . We cant know that. Right. The answer depends very largely on the politics and predelictions. I think it would have been fine or more than fine. We cant know. Because of decades worth of over regulation and of support through the greenspan put and other things, Financial System was excretreme leveraged. Nothing like this happened before the advent of socalled central bank puts. So, you know, Morgan Stanley went into 2007 on a statement day leveraged 40 to 1. Who knows what was happening between statement dates . Thats a statement on the Financial Markets and might just have been that the thfanaticismo jury rigged. Seven years later, bill. You know, when does it end . Trying to figure out how to get out of it. Jim grant, thank you so much. Thank you, kelly. Thank you, bill. Hes too modest to hold it up so i will. Theres the book. I think you will enjoy it. Thank you. Good to see you. The dows turned positive. The s p under pressure. Nasdaq, as well here. Were keeping a close eye on the u. S. Dollar on that jap needs yen and thats all i have to say. Thats what you got say. David faber with top brass at Liberty Medias investor day and the president and ceo speaking with david momentarily. Stay tuned for that. And the man behind the official bob marley brand of marijuana. Being advertised of highend pot. We want to know whether you think its a good investment. Your chance to weigh in coming up. Stay tuned. [ male announcer ] your love for trading never stops. So if you get a trade idea about, say, organic