This has been a turning point hour for the past couple of sessions. The hour of power. Sue herera monitoring it all from downtown. The markets did bounce right at the open. Not a huge bounce but the bulls will take it. Were in the green across the board. Is dow is up 52 points at one point, were now up 29 on the dow. Up 2 1 2 in the nasdaq and the s p is up 2. 50 as well. Well see some those gains waning, well monitor it throughout the hour. Breaking news on the housing front. Scott cohn on a huge lawsuit involving the big mortgage mess. These just keep on coming, sue. Once again a major bank hit over the actions of a company that it took over during the financial crisis. In this case the Justice Department says that bank of america continued the fraud that it started that had started at countrywide which it took over in mid2008. According to the civil suit filed by a manhattan u. S. Attorney, as the Housing Market was beginning to collapse in 2007, country wide launched a program code name hustle to crank out new mortgages as fast as they could and sell them as fast as they could to fannie mae and freddie mac. Bank of america of course took over countrywide in july 2008. The suit says by then b of a knew about operation hustle, and even to an extent helped keep it going. The suit says the bank would not buy the faud lent mortgages back from fannie mae and freddie mac essentially leaving the taxpayers stuck with them. The suit notes in 201, bank the americas ceo was quoted as saying, at the end of the day, well pay for the things countrywide did. Now the Justice Department is demanding b of a do just that, it is a 1 billion civil suit. We have reached out to bank of america for a comment. Were still awaiting to hear back. Of course this whole idea of suing a bank over the sins of a former bank has been criticized by House Financial ServicesCommittee Ranking member barney frank. Barney frank will be on the closing bell today at 3 00 eastern time and well hear what he has to say. Hes always colorful. Thank you, scott, very much. Warren buffett speaking on cnbc earlier today saying housing is picking up. Take a listen. In the United States, actually Residential Housing is picking up. That will have a significant effect. It hasnt got ton any big level yet. But his comments are being backed up by new data today showing new home sales jumped and home prices are moving higher. Hold on though, there are also increasing fears about Mortgage Rates and what it actually takes these days to get a home loan. A real estate correspondent diana olick joins us and she has more on that. Hey, sue. In todays report was a real good sign that recovery appears to be sustainable. Take a look. Signed contracts to buy newly built homes up 5. 7 month to month and up a strong 27 from a year ago. Supplies are still low and the median price was up nearly 12 year over year. All this from the trough we saw in the winter of 2011. Now the concern Going Forward is potentially tightening credit. Im just back from the Mortgage BankersAssociation Convention in chicago where the overriding themes were litigation, big shock there, given todays news, and new mortgage regulations coming in 2013. These regulations are designed to protect both lenders and borrowers. Theres a fine balance there that we have to figure out and i think lenders will probably err on the side of being conservative before they will find that balance and lend to the fullest. Again, tight lending but Mortgage Rates also rose again last week and are now just ten basis points before where they were before qe3. Despite the fed aging mbs, lenders are not passing on all of those savings, thats again due to high volume so they dont need to lower rates. And high uncertainty for 2013 so they dont want to lower rates. Much more on realtycheck. Cnbc. Com. Diana talking about the fed meeting right now to discuss Interest Rate policy, its stimulus efforts. Its decision expected in about an hour and ten minutes. It looks like election politics may play a part in fed policy down the road. Steve leisman here with part of the story. With the possibility that romney will win the white house, the street is beginning to think a little bit more about what he might mean and a reinvigorated gop in the house and senate could mean for the fed. Right. It is sort of interesting that the conversation hasnt been joined to this point but the rise in the polls has really bro brought it to the fore. What theyre think something a romney presidency means a more hawkish federal reserve, but when more hawkish . The thinking is he will not reappoint bernanke. He said as much. Whats that mean . It means a fed chairman, for example, like glen hubbard. Heres what barclays said. Any new fed chairman after january 20 14 14 14 is likely t more hawkish than under an obama presidency. Lets talk a little bit about whether there is any possibilities should there be a romney victory that he would begin nudging him out above his term ends in 2014. He cant force him to resign. It is a voluntary thing that bernanke would do. Dose have the ability in 2014 appoint the chairman an vice chairman and another member, beginning already actually. But the thinking is whether or not there is a war of words. And steven stanley, the economist steven stanley, doesnt think that bernanke would win that. He said, the fed chairman could resist the pressure, could trigger a potentially triggering an ugly standoff. In that standoff bernanke would have the low cards. Bernanke wouldnt want to politicize the fed but one wonders whether bernanke, knowing that mr. Romney has said im not going to reappoint you, whether mr. Bernanke would say some time in 2013, okay, im going to step down and give you the chance to appoint somebody now. So bernanke would be urged by people who know the fed and love the fed not to do that. To say no. Because that would be giving up the feds independence. On the other hand, this is one of the things thats being discussed now. Assume there are strong gains in the house, strong gains in the senate. That the republicans control both houses of congress and the presidency and theres strong criticism of the fed. Bernanke could maintain his policy and his independence, and yet that combination in congress and the administration would rewrite the feds mandate. Tricky thing as to how the fed would maintain its independence. A reminder, the fed is expected to release its latest decision on Interest Rates and its view of the economy at about 2 15 eastern time. You can read all this about this discussion we just had on cnbc. Com. Well do that, thank you. Street signs is also going to be all over the potentially market moving news with the reaction and analysis, including pimcos number one guy. Break news from the bond market. 35 billion in 5year notes up for auction. Rick santelli track being the action at the cme. Earlier this week we had an aplusplus auction. Whats this one look like . Today it is nothing but average. It gets above the sea today for 35 billion fiveyear notes. We priced within the range. 774 is the yield. 2. 91 10option average on bid to cover. Indirects at 43 . 10auction average. This auction right there, whisker under 43. It was pretty solid in the auction camp this was a little over 15 . Yeah, its pretty much average. What we gave away on bid to cover we gained a bit on direct. Pricing was solid. It is an average. Tomorrow is the last of the three 29 billion 7year notes. The market regaining its footing just a little bit after yesterdays thing. Where is the economy headed and what is the biggest headwind right now . Joining us, a guy who invests all over the world, 830 billion under management. He supervises them. Back with us on power lunch. Richa richard, good luck, before i forget, at the marathon in two weeks. Thank you, im going to need it. Youve done it before. 25 years ago so gravity has caught up. Okay. What is the market trying to tell us here . I dont think anything surprising. Its been interesting to me listening to the commentary in the last day or two. We had weaker earnings well advertised. We thought qe3 wed see lower growth in the economic data. We knew this. We didnt know wed have a meet in terms of politics. The bigger debate is until we figure out whats happening in the white house, but much more importantly whats happening in congress. House we dont expect to change. The senates actually up for grabs for the first time. It is a net gain of four. Or actually three, because if romney wins the white house, then the Vice President would have the tiebreaker. It is not that farfetched an idea. Were going to come back and talk a little more about politics second halfhour. But let me turn you back to todays housing news and the housing news that has been building over time. How do you assess the Housing Market in the u. S. Right now . So Housing Market for us is bottoming. That is consequential. But i think the critical point to me is not that it is going to be the delta that drives growth Going Forward, it is the double negative. Its less bad and a little bit better. Housing has fall ton a little bit less than 2 of gdp from at its peak, 6 to 6. 5 . Trick to me is the sentiment indicator. What youre watching bernanke try to accomplish from qe3 from asset class inflation, if housing makes people feel a little bit better, youll see that reflected in sentiment and consumption. By wait, were seeing that. Richard, well talk more in the next halfhour about politics and so forth. Down to you, sue. Tell richard not to worry about that marathon. Anybody could will sleep at night at manage 800 billion doesnt have to worry about the marathon. To politics now. Donald trump is unveiling his very big announcement regarding president obama. John harwood is in washington. He has the details. Whats he got, john. Sue, yesterday donald trump was on our air saying he would have a major announcement about the race. It wasnt major at all, turned out just to be another publicity stunt by donald trump appealing to the crackpot fringe of american politics that raises questions about Barack Obamas americanness. He offers 5 million for the publication of Barack Obamas passport application records, his college records, he also continued to raise questions about the president s birth certificate which of course has been released. So nothing for anyone to actually Pay Attention about. The Obama Campaign said direct your questions to the Romney Campaign since donald trump works for romney. The Romney Campaign doesnt want to have anything to do with this either, guys. John harwood, thank you very much. Shares of facebook seeing their largest oneday gain since its ipo in may after gaining gains in the key mobile advertising space. Has the social network finally figured out how to make money in mobile . Julia boorstin joins us from california. Hi, julia. Hi, sue. Well, it does seem to have figured mobile out. Ill tell you how Ceo Mark Zuckerberg plans to turn facebooks biggest challenge into its biggest potential opportunity after the break. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. The smasht genertock market is the best place to have money. To technology now. What do you know . You actually can make money on mobile. Check out shares of facebook. Right now up 4 on the day. Thats a 20 gain in that stock. The social media giant getting free upgrades on the back of its earnin earnings. Is facebook finally figuring out mobile . Julia boorstin is in beautiful newport beach, california with more. Reporter facebook surprised wall street with 14 of its ad revenue coming from mobile. Thats over 150 million. It is a big leap from the zero mobile revenue just months ago. Ceo Mark Zuckerberg said were just getting started. Wall street expects the revenue to grow before the run rate. Mobile helped facebooks advertising grow to accelerating growth up from 36 a year ago compared to last quarters 28 growth rate. Washington will be watching to see if it can maintain that acceleration. Zuckerberg says the company is looking for mobile revenue everywhere asking each team to own mobile monetization for their products since day one. Cheryl sandberg, the ceo, talked about tools to marth mobile consumers and rolling out more mobl ads to keep up the growth. On these trends, citigroup upgraded the stock to buy saying two of the biggest facebook risks, zynga dependency and mobile monetization, appear to be downsized. But facebook will keep growing mobile to a larger and larger percentage of its overall advertising revenue to keep up with its mobile users growth. Well have to see how all of these changes and all of this mobile growth impacts the selloff that we could see when facebooks lockup expires over the next couple of weeks. Julia, thank you very much. Were also apple, a day after it released its much anticipated ipad mini and one day before its widely watched earnings report. The stock up more than 15 this year but well off the highs. There you see it up 1 today. Yesterday not a very good day for apple. Tech reporter jon fortt back from the apple event out in san jose. Hes here at global headquarters. Lets first talk jon, welcome. You must have had a long red eye flight. But at any rate, talk about the pricing. Was it a surprise that it was as high as it is . Surprised some people. 325. They want 1ded 1. 99. I did a piece saying no way theyd sell this below 300. But i dont think thats necessarily a problem. Well see. Because apples been beating the other tablets at 199 with a 500 400 ipad already on volume. Now theyve got a cheaper one, it fills out their lineup. They might just continue to beat them they can come in at 329 and see how it goes. It may do fine. It is easier than to cut the price back down and it would be to start at 299 and say, wait a minute, lets take it up to 349. Weve now had 2, maybe 2 1 2 product announcements under tim cook. I got sense that yesterdays the stock market wasnt all that favorable. Compare the last couple of product announcements under come with comparable product announcements under jobs. I got to say, first of all, apple became the Biggest Company in the world by Market Company under cook so the bar is higher in some ways for him. Id also say the original ipad launch, the stock tanked on that, too. There were negative reviews about it. Of course it turned out it shook up the entire computing category. I remember asking on that day, why do we need this . But turned out we fell in love with it. Lets talk a little bit about earnings. We have to look at iphone number, 25 million, plus high news. The ipad number. People got spooked yesterday. A big reason the stock tanked. Tim cooks commentary on china. But people are looking to the Holiday Quarter more than this one for whats the really big deal. Jon, you have a big interview tomorrow. We want to tell but a programming note. Jon has a first on cnbc interview with microsoft ceo Steve Ballmer tomorrow. Talk about a guy who needs a hit. Ahead of the big release of windows 8 and its surface tablet. He needs a hit more than Alex Rodriguez needs a hit. Boeing shares hitting the skies this morning. Theyve beat their earnings estimates. Raising their outlook. The stock is up. 33 . Is it time for you to get in . Take a look at the days most active stocks. Bank of america is still up on the trading session despite that lawsuit we told you about at the bing beginning of the show. Sirius is on the list, at t and facebook. Well take a closer look at the telecom and social space after a quick break on power. The dow is up 18 points. Welcome back to power lunch. Im courtney reagan. Shares of Norfolk Southern sitting at session lows right now, down almost 7. 5 . The Railroad Company did post quarterly profit that was disappointing, down 27 . Also revenue disappointing in its two biggest segments. All of this garnering two downgrades today, citi downgrading from buy to neutral, bb and t downgrading from buy to hold kreting economic concerns as far as coal exportation is concerned as well as earnings management Going Forward into the first half of 2013. A monster day for earnings today. Boeing and at t among the heavyweights out. Zynga comes out after the bell. Apple and amazon getting ready to report tomorrow. Jeff kilberg, founder and ceo of kilberg capital management. Earnings per share of 1. 35. Estimate was just for 1. 13. The company also raising guidance for the remainder of the year. Do we like it . We do. For the first time during the dismal down beat earnings season weve seen them forecast a strength, an outlook to 2013. Theyre increasing their military planes as welling a commercial planes. This is positive and i think it changed Market Sentiment today. In an economically sensitive sector. Weve seen some of the other industrials like utx not able to do as well, but here boeing doing very nicely. At t earnings inching up a fraction of a percent but revenue falling slightly. Slowdown in the wireless companys contract cub scribe. E subscribers. At ts been late to the game. We saw them looking at verizon. Despite the fact at t is a 60 larger market cap here we really want to see them expand services. Right now despite the fact that they beat on that bottom line, it is a little lackluster and they have to be continue to draft ver son. Facebook beating expectations, having its best day ever right there, 4. 06 higher. You like