Why the Fed Should Raise Rates

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" Parents the president on Tuesday. -- that we elect come to the president of the yes. I'm outside he would -- You'd be back at noon. I guess do I -- I get -- and -- I and he didn't -- up this morning have a good time today busy -- have to do it."

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" The William and at that Syria was -- that's part of the description that he felt like you arrived because you were in the throes Larry -- well without really Larry King now rob Bartlett imaginary thing but -- I don't think we -- relegated to that agreement that's suitable for the web even no 100 unity. It's -- little risque at least three you know of Mac and that's that there was -- actually have a lot of -- in the morning with Imus and who what shows so hadn't been funding by the -- in the morning is the same group bought the same crew in the morning. You know I am absolutely. -- Bob in Nebraska loyal to assure us absolutely they're up at the moment I -- that it is we love having them so anti somebody was."

" Watch generally Jenna leaves brother I think was attached Bobby Nebraska actually was out of this Watson and faculty like Hannity do bundling."

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" Stand even watching this all morning Europe clearly up an Adam I mean it's a lot to do with a little bit of everything these days we got going on weekend economic numbers we got. Earnings disappointing although Caterpillar. Rocks."

" Yeah it's more the economic data so far today -- to -- if anything because Apple was a blow out number -- at Caterpillar was great this morning I mean you could say the -- a little light and add another numbers but the once the -- of the PPI was as negative as it was in the housing starts for disappointment at 830 -- that started to come out. That's we start."

" So we knew children are way down week that this is really going to be weaker housing. Although that hasn't this week yet nomination up culminating on Friday when that big number so really watch housing numbers and and unfortunately they're not all. Now they weren't granted housing starts were kind of clients and you."

" We'll talk about that we have a lot more coming up at -- Barry wrote that cover story in Barron's over the weekend about. -- fed start raising rates is going to be here Bob Brusca -- it. That fact and opinion economics speaking of superstar writes all the will be here from the Milken conference out in California -- coming on Peter -- so great line is always. No problem doing that Larry just call. Starts us off from. -- financial planning services to. Sent today to see you Larry what do you think about Bradley where we are here in this it in the market environment. Especially with regard that. You know the negative reading we had on wholesale inflation this morning which seem to be a little bit of a surprise to some people in the hearings are pretty strong."

" Well you and again a lot of the earnings that have been coming out -- mainly due to a lot of cost cutting measures a year over year revenue is down and and what we're starting to see with the PPI coming out negative this morning is is just basically. You know less and less demand at the at the end line consumer."

" What what I think though what we did get out of this number is that this whole notion and all the talk about deflation. It's kind of done. Right we're not seeing deflation much at all now. If any the concern going forward would be inflation but this you know we Eminem that we get people coming out what we're saying you gotta worry more about deflation. And I think this number kind of proof that that's not so much anymore. I."

" I would agree that Tracy you know one of the things that the Fed has been doing is is is making you greasing the -- of the economy over the last year so very. Very easy with with Loma with low rates and and all the stimulus package is. Because deflation is a big threat and I think the consumer when we get through the end of the earnings season here is that is going to prove to be somewhat adequate but not overwhelmingly strong. And and right now we're we've we've basically stop the the freefall of the economy if you will we're just starting the stages of economic recovery you know we need to see some jobs come back we need to -- bank. Start to land and that's really the next -- hurdle that we need to get over you know it's interesting we're going to talk to Andrew -- about parents about his article saying that the Fed should begin raising rates. And it's got a lot of talk the last couple of days as to you know when does that discussion start to happen. And is now the time to the Federal Reserve to start that consideration or are we nowhere near yet what's your view. -- one of the biggest threats to anybody's retirement plan and our firm works with a lot of retired people. Is the loss of purchasing power so inflation is a major concern and everybody's portfolio. I think it's a good conversation always have on the front burner but by no means should the Fed start tightening but right now we need to see job creation happened first. Without job creation consumers not going to come back. To I'll warn that consumption which is then going to start the -- inflation worries so. I don't see the Fed really starting to tighten or pull back any stimulus for for several months to a year from America."

" And I -- have a cannon and again we're going to talk about this more but based on their balance sheet I mean to raise interest rates right now would almost. Become -- contradictory. But still going forward that's about what you like and I know in your talking points you still like oversees eaten within the next couple years. International plays as opposed to domestic equities can talk a little bit about that."

" Yes yes yes I do like that Tracy you know when you take a look at at the rising middle class around the world. They don't want to go backwards they they are starting to consume more more just take China for example. You know their consumption rate of their consumers about 35%. Of their GDP here in the states where 7072%. So. So there's a lot of consumption is going to be happening over the next the next several years or so in China and the emerging markets around the world when you take a look at. At the fact that that. The consumer spends most of their money when they're 4750. Years of age. And you take a look at all the baby boomers that are that are getting older right now they're they're starting to the slow back their spending and I think companies. That are mainly selling to the American consumer. Are going to see their top line revenue growth decline over the years and that's why we like. Companies that are working not only America but around around the world as far as earnings go well --"

" It and a lot of the big multinationals that are even reporting -- my Caterpillar and I this morning. -- that but also more consumer related companies and is it just to play on China are there other markets have really. Are attractive you that you would look at the company said that there operating -- some are not America or origin. -- the parts of Asia or Europe and and and you're playing it that way -- is or to just China. Now it's it's basically everything that you -- Connell we we we do like China we'd like Brazil Lott and -- and and kind of what we're doing and in our portfolios with the merging with the emerging markets sector is we're getting some broad based emerging markets have been going deeper into. China and Brazil little bit. Parts of the days that US companies that operate over there are your buying with the native companies from those countries. Or ETF -- have. Who mainly some ATF and -- base like that you know cut."

" So that so it's pure international play it's not multinational place right now. Let's say if I'm trying to -- the I'm looking out next couple years. You gotta believe the domestic equity market is going to come back what sectors do you see coming back first. And a lot of responsibility has been put on the tech sector right now it is certainly holding it's own it's not ride into the case and all that much. Waiting to see the quickest turnaround here in the states."

" Well we we like tech we'd like to act for for sometime we also life financial's. You know back in March this year when when congress started talking about how changes to mark to market accounting we went pretty heavy into financials and the dollar cost averaging along the way there. We also like basic materials and some of our recent purchases. Tracy have been in the basic materials sector simply when you take a look at the economy declining the way it has. Sort of getting along the bottom is creeping along here in starting some sort of an of an economic expansion. Basic materials comes in the place who recently been purchasing in that sector. That makes sense site and in a lot of ways but the US market. You know we're right around almost almost 10008 and as a look at where the Dow stands so it's and it's it's like. We've had a huge run off the lows and we can talk all we want about it emerging markets and all these other places that we might find growth but we've had plenty of domestic equity growth at least the last six months and and you wonder. What's next here. Well that's just -- I think the market is trying to find. What's going to -- of the next 1012. You know 121500 points on the -- and what's going to rise the S&P -- you know 712% over the next year. I think the market's trying to find some of that that that data out there. And as we start to see that the the consumer come back into their spending mode. Taking away from the government stimulus holding everything up what we effectively need to see is it is a handoff going back from the government supporting everything. Back to the private sector right that's what we're going to start to see that probably -- second half of next year by the way that we can talk about that a little bit but with the consumer going back -- spending but is that what we saw last night from Apple because we were having. In the debate on the morning show this morning -- discussion about. Well it does that mean that consumers are back Apple's numbers and indicative of that or to just a one off that Apple itself this is such strange animal that it's able to our. You know it's it's -- butt out or or or was their larger message in that report last night. Now I think -- I think Apple has a a new technology there's no doubt about it that that is a leading leading that that space. And a lot of consumers are seeking out their particular products which you have to look at the -- that the breath. Of the Consumer Spending. You know a whole conversation. So a lot of money have been directed at Apple and and -- the numbers out which is which is wonderful but then you have to step back for a moment take a look at the overall economy say. How is everything functioning. You know it it's just not all Apple we really have to to look at all the numbers across the board there."

" Yet -- reaching people. Online for days who can't meet their mortgage payments but they're there again and -- on its troops there's a political one up there before we went to break. Where do you think this market's going to be then by the end of the year up or down. I think it'll be slightly up from where it is right now. A something that's nice holiday gift and you think of anything to do the fact that people might come out this holiday season and spend a little more."

" Yeah that's a great great conversation Tracy last year a lot of grandparents were not able to deliver a lot of extra Christmas present to the kids. And there's talk this year about grandparents say we're not going to -- too Christmas is in a -- But I would say this I would really focus on on companies that or or on the consumer Staples section rather than discretionary sector. When it when it comes to spending. Larry thank you very much for your insight lack of the present financial claims service is down in DC. -- that -- thank you for having -- good to see -- a lot more still coming -- we're just getting started after all could be back -- you just get warmed up that you did dot -- never heard that upsets you will -- later on you -- dot com but it's called -- I know and I I don't eat -- I probably should start you audited accounts we're going to talk to the CEO of that company little but later I got Peter Barnes to Brian Sullivan and Bob Brusca. But legendary at variance is going to talk about that controversial cover story from over the weekend next up foxbusiness.com. --"

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" And who and I pulled and with and others -- leave act theory Barents. Who doesn't especially after this weekend cover story and the author of a cover story in your bag is here with us right now associate -- it is the -- and I superstar. Because came out basically calling telling Ben Bernanke what to do not saying wake up smell the coffee and start raising rates."

" Other crisis in. He's over in the economy and the markets and dad may third zero right has short term interest rates and."

" It could be fueling inflation it's hurting the dollar foreign creditors are unhappy. We think it's time for the Fed to consider re right 212%. Which would be still be very accommodative but would be a -- crisis accommodated."

" That's -- setting article that the Fed lowered rates to these emergency levels when we were in an emergency it is no longer an emergency so they should wake up and do something. Inflation argument is a tough one though isn't because we haven't seen signs of inflation and you -- inflation. Inflation is created when people get up and start buying sap and right now people are still in shell shocked mode and then not doing anything."

" A consumer prices have -- in the past two months have been rising about a three or 4% rate while that may not continue."

" I think you could see inflation to a 3% next year and short community to zero are bad way below that and you might think they give away inflation is. I sure to make ought to be 2% right now. We've also seen them ignoring the dollar that debt -- concerned that our dollar keeps devaluing. And we don't really have much -- from DC about doing something about. I think below the Obama administration the Fed -- that we want the dollar that debt will help the economy figured oh. Boost exports and dad create jobs potentially and they feel that the dollar won't go down that much and that they can kind of finished this whole thing."

" It just is a great did have this discussion we talked to earlier housing starts came in below expectations this morning by the reading on inflation on wholesale inflation. PPI went down unexpectedly was down six tenths of 1%. For the month of September and do it dad -- would give you decide that hey there's not very much inflation out there and all we keep these rates."

" As well as they are for an extended period no it won't mean wholesale prices are volatile month to month you -- oil prices rise after defeating the wholesale price of gasoline prices have gone out."

" And I think food prices may may start to rise lawyers' wealth they'll."

" I don't think inflation data being the deflation argument did very hard to make right now given what's going on in the world. And and -- I recognize that the -- based on their bouncy -- on the deficit out there can actually get away with raising rates. -- they they they can do it then why I mean I don't think I think I don't think -- much impact on -- again within our on -- on the economy really mean I think that debt."

" 0% short term interest rates have basically been a boon to financial speculators the smart money sees the dollar as a one way trade down."

" They seek my and one way trade up and -- so far it's been may want to wake -- up and stopped and I think the -- is -- and I -- wolf -- benefiting."

" How much damage means he's really getting help by this asking our viewers what they think it's a sin now don't raise rates yet some Mike Tom in Maryland say -- raise rates and lower taxes and an apprentice he's saying something that's interesting."

" Will never happen Thompson's -- because every -- I -- ultimately the -- have to raise -- any Bernanke acknowledges that the questions will be sooner -- later the markets -- may they -- a year to do what they're saying -- don't think -- from the comments that are coming I -- the federal official I mean this in the debate today have you been out -- right now yeah I think there ought to -- discussion about it and I think one thing if it ignoring you favor the nation's favorite. Mainly elderly who saved all their life and the getting routine nothing on their money right now right -- that the government argument does in the overall."

" again in more more by guided in by Bernanke but is that hey we're going to do more rather than less -- times a financial crisis -- past crises here in other places have told us. Is that the government has to err on the side of doing more not less and that means accommodative monetary policy would think in more fiscal stimulus these types of things. They they they would rather do more and I think it's right or wrong this thing that's the read on what they would rather do. Did they do less -- to think they'll leave rates low for a."

" I think I think they probably will lessen the dollar crisis there commodity prices coming to basically force their hand but."

" You know used to be that wanted to -- to -- if they could it be. Extremely accommodative apps and bad -- a for a long time -- never went below no one -- 2% and food notion that somehow."

" 12% short raids."

" Are restrictive in its gonna continue economy I think that the farfetched idea and I think. -- big giant debtor country right now our creditors are unhappy with a -- the Chinese OPEC countries did seen the value of their treasury decline in dollar terms. And that the Fed doesn't seem to care about that."

" What we got two questions how soon would you like to see rates up and how soon in reality you think it's gonna happen."

" I think whoever rates ought to write anybody and this year they ought to be 11 to 2% by the end of this year I think the market he definitely I think the markets don't think that."

" You'll have a 1% short term rates until a year from now -- get the -- that's."

" We actually trial. To know 30 -- ten point 18101%. In May be 312%. Which I think going to happen -- and -- the Fed's going to have to move sooner if the economy gonna grow about a 3% rate if they don't have the view of the economy dead."

" Merit is an announcement notes even on bad currency growth this quarter reporting -- follow up -- hopefully we'll see what happens. Thanks and it it is you and you very associate editor and big cover story this again. -- the."

" Aetna Aetna at an all right yeah. You making people think there's no doubt it asked question because that's that's really to keep this whole thing is trying to decide wonder."

" His study Fed's interest has not if you can raise rates but it is twin -- expect my without 12% when I talk about seven or eight I mean this is not these are not. Astronomical numbers and that little bit -- actually stave off inflation and today. -- But they're not going to do it -- that and it."

" The Manila and that was kind of point those you know that -- a lot of people -- is that they use we could talk about it but -- they're just they're convinced that that's not the right thing to do this that's all right. -- think Bob Brusca Bob Brusca of fact and opinion economics for his chief economist for the maybe we could stop talking about it and then maybe they'll do it -- what you talk about -- on the plus -- that's gonna. That exciting game. It was that was great last -- migrated here and give him it was the great -- it was -- the game before which I I said the size it up to watch Saturday night game. And I said that it was over within 24 hours when I had with up for work on Monday. Night that weird anyway. Now the tiger fan I didn't enjoy it much William and while that's right now while. To try to tough city for a lot of reasons -- any channels actually bright spot. Should they raised cage and we just continue this discussion with skiers and other economy the tigers shouldn't I think that the Fed should be there for you I don't I don't think we're there yet I'm. I think a winning you have to remember what I think the thing you have to think about is that. When the Fed begins to raise rates in the markets expect the Fed's going to raise rates and expected going to raise them again. And so market rates begin to go up one the Fed hiked its rates and it's very hard for the Fed to modulate the whole process and I think it's too soon. The put that in place to take a look at the housing data that you were just talking about housing. Yeah -- the starts numbers out you know they were they were up on the month but actually it was the same place without that where the month before. Because of the downward revision so. And if you look at the data across regions housing is actually very flat -- come up from its bottom but now the regions have flattened out there isn't really any more upward momentum. If you look at the big bad -- housing you have this this tremendous drop and then this ET TC we see little. Increase at the bottom and that doesn't have any momentum left to it right so I. We're going to be -- the housing credit pretty soon. -- any boxes facility shops are okay. My god -- that there are what we know about right but what about -- as you know current situation we're losing the housing credit. Pendulum here. -- a fight and want that credit to keep going right -- are optimistic economist -- that we needed optimistic economists lately. Anyway we've called Bob and he even says it is that this I think -- recovery can be optimistic that you still have to look at the facts -- the -- the housing right now aren't real positive. Write him off on that and you've got the negative policy shot coming people looking at the -- potentially raising rates at some point. I'm in the economy doesn't pick up housing isn't going to be underpinned by very much so it doesn't strike me that that this is a real propitious time to start raising rates because. No other sector of the economy has really come on -- manufacturing has a little bit about what momentum. The last I SM report on services that survey showed some improvement in services -- We haven't seen services jobs and I really think you've got to see some things begin to cranky and you've got to see this this is or you've got to see jobs coming on stream. He can't raise rates on nothing."

" You gotta have something. Yet we have nothing end caps and attack like a daily weather Sonya I think in particular there's been no talk of the dollar and eat eat eat. I've noticed it in Ben Bernanke speech yesterday no talk about whatsoever. It seems that they're not talking about her at all down here in Washington and I'm not really sure why now I do now we have people hearsay. The dollar has been devaluing slowly over the course of yours is not a new phenomenon. The same time. You gotta believe it's going to get to be a point where time is insane amounts -- you got certain that this does not --"

" The Chinese currency the holding its value better than other currencies dollar's decline against the currencies that are probably should decline against that's because. It can't decline against the currencies should decline again in China's currency. You know call out beyond Pollack the renminbis in -- college. It needs to be the currency that needs to rise more. And they don't want to do that on the other hand they don't want to keep buying dollars which is what they need to do not heed their currency weak. -- the Chinese have Aaron -- a conundrum and they've got to decide what they really want to do and right now while they're sitting dollar billion sitting back complaining about everything. The fact of the matter is is that all the time that we have run this this miserable. Strong dollar policy we haven't ever done anything about it. So this is -- this is lip service that's all it is. And when you take a look at the problems in the US economy and got a big current account deficit and how do you get rid of it we get rid of that really. It two ways you know either you let the dollar declined to become more competitive you kick out more export to block imports. Or are you run a recession if you -- a recession and imports collapsed and you trade deficit will collapse then. I don't think anybody wants a solution and I think that's a good solution you know until you pleases you could get other countries to grow more right. You could then get them to grow more you could get them to buy more US goods as well as what Bernanke was talking about in his speech well we can consume -- they can consume our. You know kind of the cool by -- solution again that any evidence that that's happening the key point in that they talked about I think kicked it around. And they sort of give lip service they think gavel kind of try to do that. And it's like your kids and -- he had data did my homework we'll. China is making this transition are trying to from a -- beef export driven economy to trying to finally have some consumer demand back that up in this. Promise of the Chinese consumer billion strong. Are being there can drive world economic growth has been talked about for a long time but will it actually come to fruition. In the next. I don't going to check academic evidence of doing that they still basically have an export. -- economy so that's all high and and and it and Japan has an export driven economy in Germany has an export driven economy won't look at. If if some of the biggest economies the world and an export driven economy somebody's gotta have the imports. And that's the problem the problem right now is that the US has got to many of those imports and we need to figure out what to do about it -- you don't do anything about it the president actually files on the dollar that's what happen."

" Don't think it's out it's clearly -- us let's face it one. Our government. Internally doesn't seem to know answering winehouse whose most savior that comes to that you know."

" You know ideas about both the foreign exchange market figures -- they figured out. That's -- the -- let's talk about -- dollars in the week is up funny because. If nobody is going to do anything what else can happen but the dollar got weaker the public can happen. Yeah but the good solution that battered the alternative what's the alternative the alternative is that. But it doesn't get weaker but we have another classic recovery US economy you know takes off we have another import boom we have an even bigger. You know current account deficit and we have a last time. And we have now and I'm not another crisis going to get what we have even more dependence on foreign capital flows may definitely worth an area. Much worse -- penny I think that this erosion in the dollar is actually good it's something that is stealing something that needs to be healed. And down as long as the doesn't fall you know too fast I think that infected the -- and I think that it makes it clearer -- where the burden of adjustment really should -- The US I think US could do more -- could adopt something that anonymously want to then adopt a consumption tax and they talk about European found the AT. Right and that would really cause people to stop consuming a lot which would cut imports down a lot into it. You know and and that and it doesn't -- your income you can -- all the -- you want but when you -- spend -- and you -- as --"

" The argument to those that it's regressive tax and really -- the middle class more because they spend more of their money on consumable goods."

" It it could you give could attempt at food you can exempt certain kinds of you know lower priced clothing items that there are ways to poke some holes -- that also. I think some of the steam out of -- tax raising capability maybe you can do some of that I'm."

" And actually make it very attractive."

" So I don't think it's something you can't -- and I think the problem basically is that Republicans hated."

" Because they -- the -- powerful revenue raiser."

" And you put that kind of revenue raising power in government hands and you're never going to stop government from growing and -- is promising counter argument you know the lap of them. I don't know -- happening now the we need to do something that I know that that is a powerful remedy you know it's a little bit like a baseball player taking a steroid you know Richard Nixon would say. You know this it would be wrong peaceful."

" We're taking steroids unheard of thank you unheard of -- talked to you Bob Brusca with the sun today but this is stuff -- glass half well always. I speaking of which -- so what's coming up from out of the Milken conference payless yeah exactly in the very optimistic guy in California. Peter Barnes is going to try to extend Tracy's home buyer tax credits are looking forward of that everywhere in our that I since Chris got a sort of a new segment on what caught his -- to them that they would -- my. Today next foxbusiness.com."

" I look back -- isn't flat at 12:30 AM east -- that means it's 930 on the west coast good morning to all of you out -- Dow's down about 78 points right now. Mostly on economic data today we've got some pretty decent earnings reports yes sellable cannot -- hours were still over that. Important 10000 mark though. McShane is here today and he is going to tell us what -- his."

" As a new thing you got started to sticker over the show we can't -- that just. Like that's a couple of about. So yet -- being here to tell you what caught his eyes -- tell you open well right and Cotter as we know is stumbling around -- somewhere -- we don't know -- areas that they that we don't of that that would combat missile Cotter. -- on this cat needs you now looking homeless yes anyway you know I tell you what you don't actually cut did you see us to our friend Stuart Varney. On Imus this morning this really caught my ally in the best thing I've seen our network all day today a -- so Stewart's on -- Stewart's great by the way Atlanta one of my favorite people. And he's on -- this morning any and all I saw was him blather on about the economy in the normal stuff like caught the end of it. Talked to him afterwards for awhile and everybody was telling me that was there. SARS coming -- to do my report. That's how great Stewart was -- that's fine but he's talking about the company's that -- deal with. That's -- that I want back and I watched it ended the beginning of the interview was great people should watch the latest on our website at the dig it up on the job on the video section. He went on and on he did you know he hitchhiked around Europe of around the world for four years and somehow stumbled and -- ended up in Hong Kong. And then always wanted to go to America so for years after. Hitch hiking around the world he gets to San Francisco and applies for a job is just a random job opening -- televisions. Newscaster could start a job and into getting the job that randomly was in business news that's got to start but. He's -- checked around the world that in the British peace corps always red -- London school --"

" So does all these amazing things but I always. He's brilliantly but I tell you with that British accent he could gone and recite -- alphabet and the well listen -- and that was our that's why they had in mind."

" Glad you brought that up that's exactly why they had him on a joke growth lies on the other dead and then -- happen to be when I was up there they started talking about Imus and and Bernie and and and -- start talking about how. Imus had been watching Stewart the day the Dow hit 10000 stores on of course next hour at 1 o'clock -- I network until it was on the exact moment and he says no matter what the heck -- says. It is believable and authoritative than -- you know no matter what so that was their theory going is -- they booked him literally by the book the -- they brought a piece of copy with something. Some idiotic story on it and highlighted in the meets Stewart read a lot of -- down to prove that if somebody else. Let it useless -- Stewart says it."

" Actually from Jersey I could recite them magnet car and it would still found that exactly and."

" Speaking of authoritative Brian Sullivan joins us now from out in LA would you agree that -- conference that the -- the most authoritative person on the network."

" But anyway -- said."

" I would agree to that yet. I think if he. Hasn't gone out there how's the -- now deal and I said that very supportive very authoritative that it has no authority of what you just said but that's -- how's that -- the -- out there when he learned."

" Alerted California tell -- lot of problems -- I mean that's already here I mean first off this is what's called the state of the state conference but a lot of Milken Institute route Los Angeles really it's a one day. Think tank. Lot of different panels some great guests and great people here. Try to figure out how to solve the problems of California mean the idea being is as goes California so goes the United States. I don't think that's as true is it used to be. But still it's the most populous state I mean it is the fifth biggest economy in the world -- me put it this way guys if California were its own economy it would be a member of the G-8. Huge so what kind of your ideas to the size and scope of California."

" So Brian -- the game plan out there because you're right it is huge state it anchors our country we look to it for guidance and examples. And that it's kind of a big mess so what what are they doing to try to improve this."

" Now that's that's you know right now they've been cutting costs and government level but it's only been a small -- to got a 26 billion dollar budget gap they've got to solve. Course they got a real estate crisis that is ongoing here. Really what it comes down to for the -- that we've had on -- to -- John Chung the comptroller of the state of California. We've got Gavin Newsom coming up a bit later on they've got some great guests coming on. The idea is that we've got to get jobs going because it doesn't matter how many mortgages you modify. Or what interest rates are. If you don't have a job if you all the permanent long term job you're not going to buy now knocking at my car. You're not going to feel economically sound -- probably going to be a bigger drag on the system. That a net add to GDP because if you're not working you're not paying income tax and sales tax when you buy. So it really comes back to. The job market and how do you do that everyone's focusing trees young green -- that's -- we just nine days. Well it's nice but the problem is this as we discussed with a with a venture capitalist guest earlier on today on Fox Business he said listen. We come up with the ideas for green tech here we develop the technology we've patented technology. And then we build the solar panels and wind turbines in another country we've got to start making them. In United States and in California -- British -- and ideas overseas for cheaper -- the problem is that the jobs are not being created that's."

" End point that's an interesting point Brian because that it is you think intrinsically. Green jobs California like basically put the pat and -- green technology. And yet we're not we're not helping them create these things so they need. State tax credits to stay in house they need that kind of those kind of benefits to encourage people to manufacture in the state."

" terrifying statistic one that -- we heard from Erica McAfee McAfee capitol this morning. So how many people live in in the city California what is it 4050 million people so much that right. How many people do you think hey what's the number of people who pay half the income taxes. At a -- 4050 million population what absolute number of people pay 50% of the income tax. In the entire state. I set top 5% 10050050000. People. Paid the top fifty what they got 5050 -- no no no they don't -- the topic did they pay 50% they the end of the -- all the income -- a forty to fifty million people that's right. -- out so that's what I guess what our council Lotta those people. Now hello illicit or my parents right I mean I grow up I grew up here I was born in Los Angeles and we moved around -- little bit moved out of San Diego and in 1985. My family packed up got you all and move to Virginia. You know my dad my mom both gainfully employed and in California you know my mother. Not to meet you personable my mom you know you never finished high school basically hitchhike to California and she's a teenager. My dad was in the navy got out San Diego like the weather stay here you know that was the California dream right they met fell in love had me. Fell out of love after having me you know and obviously. And you know and then they moved you know that was the California dream and what's happened is that even know population is growing in California. Every year. The people that are producing -- are starting corporation starting companies they're moving away. She got more people that need assistance and fewer people to give them. That assistance and so the problem is how do you solve that right you've got I mean my -- nobody cares I think but. You know as you gotta lower taxes you got you got to encourage people to start companies to stick around and to build stuff."

" Right they haven't -- stuff we gotta jump into and a big illegal immigrant problem."

" You're kidding. That's what I'm saying session that many on the left best to be top of the list."

" I'm sure it is that's probably a little more of a political hot button and then now this you know dull business -- willing to get into. You know I will say that you think about it if you know we have a high percentage of people who are non citizens. They're not going to be paying income tax right now that's why there's been more call for back. Because the idea being is that people who are here illegally or of people that are you know committing crimes relating -- gangs whatever might be. They're going to pay income taxes right how much what's the income tax rate on a dime back. However they will buy stuff they'll buy cars that might close the bite so if you -- on if you give them. -- higher sales tax may be reduced income taxes you might go to capture some of that underground economy. Which has been estimated as much as 15% of the overall California economy completely underground aren't so and raise tax makes Jersey looks pretty good doesn't it."

" Yeah. I know Dave Ratner drink yeah. -- I've got out of there I felt that -- constant. Conference he's going to have guests on throughout the day is -- some of the things that those people -- there. Gavin Newsom one of them. Talk about scenes yes date of the state is not so hot anyway we have -- market movers today that we're looking at that stock -- it -- we're down ninety but there's a lot that's happening Apple of course was a ballooning out of the park last night. Selling more -- and -- the Mac computer is helping these numbers it's been over the years of course the iPhone clearly doing well too crazy numbers crazy iPhone but Apple on fire. Caterpillar we talked about moving today really because global. Revenue numbers not so great although again beat estimates the bottom line and the outlook -- but online outlets and but again on global write my guess that is global absolutely. China exactly know the facts shares climbed about 5% earlier actually after the -- pharmaceutical company initiated clinical study of an H1N1. That is the challenge -- guys at the time they one trick pony there. Pretty much a one triple it is absolute yeah they're -- analysts want to -- them moments which advocates of those very. And UAL parent company United Airlines moving today. Put in our third quarter loss because of falling. Fuel prices and I just have to say that was very inching up the day Alexis Glick had gone. CEO of Southwest Airlines. Gary Kelly Gary Kelly and opening -- him he is already hedging against the fuel prices going up going forward and he won last time."

" In the master -- for years and -- did so well it's why they were profitable airline and everybody else is bleed money exactly -- tank mind you it doesn't always work they. I gotta learn that the current beliefs and -- buying high when you are already going forward."

" UAL benefited from these prices but may we all could take a lesson from. Southwest we're gonna -- to break right now and then I get to tell you what caught. -- when we get back. About foxbusiness.com. Slash -- analysts saying -- you can get all over the place on Twitter at the end live you can email us at the end live at foxbusiness.com. And of course you can download our podcast on iTunes and watch and I --"

" In line and that's right. -- that who is another great 1 this and our -- 69 so it's all this bid program in -- does this stuff that you say you wanted somebody to extend your home buyer protectorate."

" Yes."

" Maybe people aren't it -- about that Peter Barton."

" Yeah Martin's home. We need this to be extended to not just first time homebuyers. To all of us to Tracy --"

" And and you can kind. The it's gonna it's gonna happen yeah."

" Haven't and it's going to extend it but like when it expired as it has become a one wrong."

" Well what at a minimum they're going to probably extend the 8000 dollar tax credit for the first time homebuyers but the one of the leading proposals out there is from senator Johnny Isaacson. By Georgia Republican from Georgia. He wants to not only eight and make sure that first time homebuyers can take advantage of but also. All homebuyers anybody. And he testified about this this this morning at senate banking committee. And among other things that his his plan would also allow the credit to be extended to June 30 of next year. He would limited to individuals who make up a 150000 dollars a year. And the couples who make it up to 300000 a year and so Tracy I don't know you might BA you know out of luck on that did you make so much money. And then the Congressional Budget Office the Congressional Budget Office says that extending it. This broadly to first time homebuyers as well as the and not not first time homebuyers and to those income levels would cost about sixteen point seven. 1000000000 dollars again through next through next June. Lot of momentum a lot of traction to do that that senator Christopher Dodd the chairman of the Senate banking committee said that he would like to see the Senate act on it in the next few days and then Shaun Donovan the housing secretary on behalf of the administration said the administration. Is looking over this proposal as well as others. Is concerned a little bit about the cost and how in the form of it but he said that they would make an announcement on it sometime within the next few weeks it does expire November 30. So if they if the industry and congress and and and policymakers here want to get this thing going through the very tough. Sales season of December January February that's the slowest time of the year as you know because of the weather. They gotta do this and in the within the next few weeks and it and there's a lot of support fort. They're trying to figure out how to pay for it whether to just that it that the deficit are taken out of the stimulus package as Republicans are proposing but it's it's gonna get done. In one form or another --"

" A guy had to put my two cents and he's all better but it it is a shocker here we -- I'll I'll leave now not addictive when you look at that it's and -- That by limiting income that means limiting housing for amana home that you probably going to purchase so we're talking about moving. Lower. Valued homes. If they extended it and allowed the big -- to go around -- multimillion dollar colossal messes. And get a break for it they would go do so. And then you get in this new money put on the -- and you start with employee."

" But what -- they found they thousand dollars -- to one of those people I'm yeah that's I think what it was eight grand you to do -- how upset over a million."

" make something work that could you ask about that nothing and I thought that attend these people out lower income songs Tracy and -- if you're on TV while the -- that."

" We're spending too much money but that's what you have a hundred K let's. 138000. 300000 dollars as in the top 5% having come so you're providing a credit to probably 95%. Of the population out there and the average home prices what a 160000. Dollars up. This could move atlas and that they say it it's sold extra. 350000. Houses just from from the from the launch the program until now so far this year that's about a month's worth of inventory so they're projecting it will sell another 400000. Under this proposal -- those income caps on the -- thousand houses extra houses could be sold because of this according to us some of them economists -- my."

" Some understanding and said this is the house version of castor -- I did talk to about their military is about this and they said the same note that this. There's going to be a handful of people that are going to run out in these middle income homes if I guess I'm I'm biased because I don't there."

" Lower income I don't think it's lower income the average cost the moment America right now the average cost you know is about a 1156870000. It's I had. And that's summit that's a middle class home you're right for New Jersey and new York and why it's not and it it can't. Okay -- higher price top housing market you're absolutely right. But outside of the beltway and Winchester Virginia where you know Brian Sullivan went to went grew up our live for awhile. They can buy a nice home out there for a 330000. Dollars and use that and that tax credit. Who could help a lot. Is the rich folk like you look at Peter talk to people. People getting our world broke and Peter -- you just make too much money I think and I don't I think they'll act -- upon us let's but I I think we'll. And that she asked who your next gas isn't duly it's going to talk about about this new -- housing program for lower income families we'll tell you that this 8000 dollar tax credit will do a lot to help them the idea what they're trying to. Yeah it's important Anderson they have to stay and house and that is the minimum at like three -- itself. Peter by the way the sixteen point seven billion just is that the track of where all this coming out of that stimulus money out of the 78 wells that are additional money were -- try to with the wrote that they're proposed the Republicans would like that sixteen point seven. To just come out of the existing stimulus package there they do not want that they support this idea they just don't want to tack it onto the deficit basic let's use existing money appropriated money and you know what they're they're going to. They're going to work some map because this thing is very popular it has been like cash for clunkers if you look at all the stimulus programs out there. They're they're couple of that have been very successful and this is one of them."

" All right thank you Peter I would ask you this stuff is -- side comments board gets her fired up I. -- Susan dude is Susan duties in the Virginia housing development authority you want to have out of with seasonally when asked you some questions about physical thing before I dive and tell us what you're doing for at the lower in there's a low income."

" Out there now what is it."

" Well I believe you promised to be a little bit nicer to me than you -- to the other he has my dyslexia or other parties like young demographic Obama answered you -- I. I've not yeah I. Well thank you we are."

" Very excited yesterday when the administration announced a new plan to help state housing finance agencies. I'm not sure of -- committee with state -- and finance agencies that each state. Had the housing finance agency that really concentrate. On providing affordable. Rental and homeownership within the states. And this plan will really help us get back in business unfortunately you know when when housing. Wasn't so much in troubled over the last year the bonds that we felt about our capital. Had a penalty associated with them because it was housing. And we have not been able to sell our bonds in a way that would allow us to provide the first time home buyer of mortgages that we. Have done for many decades. So this plan will it enable us as safe housing finance agencies have a long history. Providing mortgages and we did the right way you know a lot of what's happened and calls to the mortgage crisis was because people got sub prime loans and adjustable rate. Loans and they were not able to stay in the hands while we do without housing finance agencies. Is we make sure there are well documented loans we do tried and true is. Thirty year fixed rate mortgages. We really emphasize things like homebuyer education that people understand. The obligation they're about to undertake. And mostly we service our own line and so that we can do everything we can do to make sure people stay in this time. So Susan mason took about new bond purchases to keep these rates reasonable where people go and if they are they -- why haven't I think that they qualify and too where they go within their state to try to get one of these loans. That's a great question the best thing I think for. A year listens to do is to go to I national organization's website. And that's www. In CF. HA. Dot or and that stands for the national council of state housing agencies. And they can go on there and click on their state and find the name and information for their and state housing finance agency. I'm in Virginia and I -- the Virginia housing development authority. And then we can work with them on making sure they know if they qualify what that limits our. And how they can go about working with one of our lenders to get -- mortgage -- up."

" Topic that we just finished up with Peter in all seriousness if that's something like that was not extended. The 8000 dollar credit you have for people galore in come wrongs what would happen in the market versus it being extended to me deal with people. That this could help all the time and how much how much of the big deal something like that."

" Well I think right now it's very important get that first time then buyer in the market. Because we really believe percent of buyers will help. With economic recovery in the housing market. And didn't want a couple of concerns we have right now for example there are many communities that have. Vacant properties because of foreclosure. And the more we can get those first time homebuyers back in the market. Purchasing those hands are also purchasing homes have been someone they can trade up. To bigger hand is going to be better for everyone in this economic. Time."

" This comes back to the whole moral issue of it is on the Obama right. You know should we be pushing people into homes this is what got us into trouble the last time. We had clearly no one was checking whether or not not a -- or pulse and they gave you a mortgage back in the day so. Here we are again trying to get people back in homes are we creating you know bubble number two. Absolutely not."

" And that's the difference and that's what the administration has recognized. In working with housing finance agencies we never dead those types of -- that you're talking about we didn't do sub prime loans. We did that tried and true is fixed rate. Thirty year mortgage we made sure that people have the wherewithal to repay those mortgages. We made sure they understood through homebuyer education what they were undertaking. So the type of lending we do. It's not the type alleging they got us in trouble. That over the last year -- season."

" Extra time that we are nice Nokia. I was doing Gregory yeah 'cause I'm very guy hey yeah. Nobody's saying and I'm good with this Virginia housing development authority of freedom of that after everything we've been -- for flexible for the work with you that --"

" about a half. Right now I I at -- employer -- more government spending but would you guess I'm I I -- But this is the one thing that could get this economy going because housing is the root of the problems here that we don't get the housing market back. We're toast for much longer time right. So you put out his credit but you're doing its dare I just only see you be able things hypocritical god -- absolutely not because you're you're gonna. Credit out put out to everybody this -- notion that just like. A handful of people qualify."

" I'm afraid of what may have put your eyes until we get to find out about them and that's really thought it's okay that's just on. I -- you -- dot com foxbusiness.com live don't go away."

" About about business that Tom cotton exchange and make me laugh. Upon what is only down seventy it's Connolly. A little bit slots and was doing 71 we started and you do the -- out at that point you worked so hard that it. -- know that that you want to bring down a lot. I'll live as the housing we've been talking a lot about housing this is actually a week of housing data at Friday's numbers big culmination of -- and it's not all the numbers have been disappointing."

" They weren't they weren't there on Dow below forecast today that the earnings have been pretty good all things considered the -- thing -- consumer Apple was good last night but in general there's a lot of concern about. The consumer whoever that is ongoing and that holiday shopping shopping season Jeffrey Hoffman should know figure to about that yeah. You did dot com joins us with -- outlook for the holiday season Jeffrey good to see you so you bids and auctions side essentially for those and aren't familiar with the right -- give us a little. --"

" Sure but were actually a little bit bigger than just an auction site can we do excess inventory sales were. Retailers and manufacturers around the world we do it on you -- dot com and auction but we also do it in red tagged dot com and fixed price format as well."

" Okay so -- so what excess inventory means. Anything I mean I'm in the market for a -- idol look I want."

" Yes -- you know excess inventory exists in every single specially in the retail economy of this past year and every single product category. Right we have a specialized primarily in things like consumer electronics computers. We do jewelry we do apparel those are -- but we do have sporting goods as well if that's what you're looking for giggled some diamond. Hearings on here and whatnot and I'm looking are now bigger interest to your wife would be happy -- that is exactly right so tell me Jeffrey over the last. -- now safe to say for the last six months what's changed what of the trends been in. In the inventory cycle and things like that you that you noticed terms maybe that would give us an idea about what's gone really gone on the economy."

" Sure there a couple of big -- first of all. After a you know after a -- of disappointing retail season last Christmas season. And just the overall recession impede Consumer Spending less the manufacturers and retailers finally got a chance to cut inventory. You can't cut inventories quickly if you notice that you need to because production lines take months to run product out but here's an interesting statistic Korea. In the second quarter of this year department store inventories -- United States are down eight point 8%. So there's less product in the store they've cut back and scale back and prepared for prepared for this retail season to move less product total."

" So what does that mean for -- like you know if they cut back inventory there's no access."

" Well there's always excess there's always access for a couple of reasons first of all. It's still really difficult especially in a recession for retailers and manufacturers to -- to forecast retail sales. Sales were down in the second quarter and you know across consumers this country about six point 9%. So sales declined less an inventory which means they should be able to get closer to meeting targets but there's a lot of categories if you take consumer electronics for example. There's always excess inventory because there's always a new model they planned it that way they called planned obsolescence as soon as you get your iPhone. A new one comes out. -- it's better and we get all the ones that -- on the shelf yesterday drives me nuts is always that haven't we had the three GS iPhone came out right after I was an idiot enough to by the regular phone and right next week -- the way how does this thing work so -- you did I'm looking at. Parts on the get a cat TV write a twenty inch this LCD you know just -- you on your marriage so it says it's -- countdown clock. Counting down to zero I would assume at some point and it's his bid to win as a hundred bucks and buy it now for 169 and have been 66 did so far so. That means I can buy right now from the 69 nobody can that against me as -- it so that means. No it doesn't mean they can't bid against you they can keep bidding because if you look at the quantity typically we might have a hundred of them. So if you want to just grab one of them and be done with the bid and and not take your chances of the -- going beyond the level you want to bid. You can buy one now but they're still 99 left in the option typically so and they -- will give you way to do it both ways. That's right that's so what do you forecasting for this holiday season."

" Well I we always see where deadly forecasting a -- an online sales online sales will grow again. One of the things that's a really interesting consumer trend is consumers have figured out. Did the Internet typically knows where the lowest price is and can look at a lot of places for the price of the product -- looking for. Plus product reviews very very quickly so consumers are are we think they'll be increasing consumers doing online shopping. Using the net to find the best product at the best price in the nearest place they can get it."

" Good luck and I I think I am I think the consumers much more savvy then he or she used to be you did dot com thanks a lot appreciate joining us Jeff Hoffman -- Thank you thank you wonder what Tracy what caught traits he's like okay -- and don't have -- products I you -- knuckles are white from. -- on the I YouTube to stream. Their entire concert. On YouTube did see that the entire show now you have been like way in the front as far as the home using social media and a gunfight with their record labels over it because. Because they've been so good about it but Sunday's show at the world on California for the first time will be streamed including U2 dot com or are YouTube. So YouTube -- or YouTube and watch the entire think they're expecting a two billion people who show up. And at what times to show. While California Sunday is Sunday night in California and I California and try to catch that I might try to catch."

" I was a sore point for me that everything would have -- did you know they were anti stadium recently. Best and I was to go Friday night show and -- the canceled the show moved it to Wednesday night I could go Wednesday."

" It's terrible so I missed the shows that I can watch it on YouTube the first concert I ever went -- as an amplifier for you to. I -- about for the first time person -- How did it change your -- if he was around the world -- before that Obama got very political. In a bunch years there with the whole -- into our human called president and it. The whole point is that look what's he clears about it. Look at that he cares about the world."

" It and look what we're doing this is cool and the question becomes why go to a concert why even bother standing online -- yeah it's any back in the day. My ex husband would sleep out two days at a time for Springsteen concert what I'd tickets why pat and I don't care where he sleeps and put it that's -- if -- could expect -- I don't know that you -- it's -- concerts. You do anything now and patty how the secondly it was going to make money it's just another not in that coffin."

" Of the rapidly good point I was gonna watch that show thing that is actually very good one -- so they can make up for wilderness you thanks for having me and I sat in the act. Tickets out of the morning from six to nine also on the Internet fund this is not come life."