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THE S&P IS GIVING UP FOUR.
THE NASDAQ IS DOWN BY THREE
POINTS AS OF NOW.
4,065 IS THE LEVEL THERE.
>> JOINING US IN OUR "CLOSING
BELL EXCHANGE" IS AMY WU, JERRY
FROM PLATINUM PARTNERS, MIKE
SANTOLI, AND DREW FROM
HIGHTOWER, AND RICK SANTELLI.
AS WE MENTIONED, DREW NORDLICK
TO YOU FIRST, WHAT'S GOING TO
TAKE POLICE BETWEEN NOW AND THE
END OF THE YEAR?
>> SCOTT, WE EXPECT TO SEE A
SANTA CLAUS RALLY THROUGH THE
END OF THE YEAR WHEN THE FED
DOES NOT TAPER NEXT WEEK.
OVER THE PAST 30 YEARS THE MONTH
OF DECEMBER HAS AVERAGED 1.9%
GAIN AND BEEN POSITIVE 80% OF
THE TIME.
FROM THERE WE EXPECT TO SEE AN
EARLY JANUARY RALLY RALLIED BY
NEW FOLLOWED BY EQUITIES AND
FOLLOWED BY EARNINGS AS
COMPANIES REPORT THOSE TO
FOLLOW.
U.S. MARKETS HAVE OUTPERFORMED
MOST OF THE MARKETS THROUGHOUT
THE COURSE OF THIS YEAR.
WHILE MONETARY POLICY IS
EXPECTED TO REMAIN SUPPORTIVE
OVER THE INTERMEDIATE TERM, WE
WOULD USE ANY DOWNSIDE
VOLATILITY AS OPPORTUNITY TO
DEPLOY NEW CAPITAL INTO DOMESTIC
EQUITIES.
>> THAT WAS PRETTY WELL
REHEARSED.
AMY WU, WHAT ABOUT YOU?
WE LOOK AT THESE MARKETS.
WE HAD AN INCREDIBLE RUN AS HE
WAS SAYING HERE IN THE U.S.
YOU KNOW, GOING INTO NEXT YEAR,
IF IT'S ALL ABOUT EARNINGS OR AT
LEAST DEPENDENT ON CONTINUED
GROWTH, WHAT KIND OF GROWTH ARE
YOU LOOKING AT?
>> HI, KELLY.
USUALLY I'M THINKING ABOUT
HEDGES, HELPING PEOPLE PROTECT
THEIR PORTFOLIOS.
WE'RE SEEING NONE OF THAT
DEMAND.
WE'RE SEEING NONE OF THAT
ANXIETY.
THE OPTIONS MARKET, TOO, IS ALL
ABOUT UPSIDE.
WE KEEP SEEING S&P CALL SPREADS
TRADE.
WE KEEP SEEING SECTOR UPSIDE
TRADE.
IN TERMS OF WHAT I CAN SEE FROM
TERM STRUCTURE FROM IMPLIED
VOLATILITY, IT SEEMS LIKE ALL
SIGNS SAY CLEAR.
WE DON'T SEE A TAPER FACTORED IN
UNTIL THE MARCH TIME FRAME.
>> DREW CERTAINLY SEEMS
CONVINCED THERE'S GOING TO BE NO
TAPERING IN DECEMBER.
STEVE LIESMAN, WHO HAS PRETTY
GOOD SOURCES, WOULD HAVE YOU
BELIEVER OTHERWISE.
HE'S REPORTING TODAY IT'S MORE
LIKELY THAN NOT YOU WILL SEE
TAPERING AT THE DECEMBER MEETING
NEXT WEEK.
WHAT HAPPENS IF THERE IS, IN
FACT, TAPERING?
WHAT HAPPENS TO STOCKS?
>> I THINK THEY GET CLOPERRED.
WE SEE A LOT OF VOLATILITY FOR
NEXT YEAR WITH POSSIBLE RANGE ON
THE S&P WITH ANYWHERE FROM 15,
25 ON THE DOWN SIDE TO 1975 ON
THE UPSIDE.
I THINK YOU SEE THE DOWNWARD
MOVE BEFORE UPWARD.
>> WHY DO STOCKS GET CLOBBERED
ON THAT?
ANY TIME WEAVE SEEN FED
TIGHTENING, EVEN WITH
VOLATILITY, CERTAINLY HASN'T
BEEN THE END OF THE RALLY.
>> BECAUSE PEOPLE ARE
UNDERESTIMATING THE AMOUNT OF
NEARLY FIVE-YEAR RALLY WE HAVE
THAT'S DIRECTLY ATTRIBUTABLE TO
THE UNPRECEDENTED LIQUIDITY THE
FED PUMPED INTO THE MARKET.
WHEN THAT SAFETY NET STARTS
SLACKENING, PEOPLE WILL TAKE
THEIR MASSIVE PROFITS THEY
GENERATED AND SAY IT'S TIME TO
TAKE PROFITS AND THAT SELLING
WILL DRIVE THE MARKET DOWN.
>> RICK SANTELLI, JACK BOGLE WAS
TALKING TO KELLY YESTERDAY.
SAID HE BELIEVED THE TAPER WAS
ALREADY PRICED IN TO BOTH STOCK
AND BOND MARKETS.
I'M WONDERING WHAT YOU THINK,
RICK, AS TO WHETHER ANY OF IT IS
PRICED IN ANYWHERE.
>> I WOULD SAY NO.
I HATE TO DISAGREE WITH SUCH AN
ICON BUT MY OPINION IS NO.
AS A MATTER OF FACT, OUR LAST
GUEST HAS IT NAILED.
SINCE 1979 WHEN I FIRST HAD A
MEMBERSHIP AT CME, I'VE BEEN
THROUGH A LOT OF CYCLES,
TIGHTENING AND EASING.
WHAT WE'RE GOING THROUGH NOW DUE
TO QE, IF YOU GO TO LAST FED
MEETING, INTEREST RATES HAVE
MOVED HIGHER.
LOOK AT S&P 500 IN THAT SAME
TIME PERIOD.
DOESN'T LOOK LIKE IT'S PRICED IN
TO ME.
I'M SO GLAD YOU BROUGHT UP THAT
STEVE LIESMAN SOUNDS CONVINCED
AND HE DOES HAVE GOOD SOURCES.
MAKES ME A LITTLE NERVOUS.
BUT I DON'T LIKE TO HAVE A GUIDE
WALKING ME THROUGH WHAT THE FED
WILL OR WON'T DO.
I LIKE IT TO BE APPARENT IF
ANYBODY DOES THEIR HOMEWORK,
WHICH IS EXACTLY WHAT THE
PROBLEM IS.
IT'S NOT A QUESTION OF
TRANSPARENCY.
IT'S A QUESTION OF WHAT ARE THEY
GOING TO DO NEXT?
HAVE THEY DECIDED?
HOW CAN THEY COMMUNICATE THAT?
MAYBE STEVE'S PART OF THAT
PROCESS.
JUST LOOKING AT THE MARKETS, I
DON'T THINK IT IS PRICED IN.
ESPECIALLY IN EQUITIES.
I DON'T THINK THE FIXED INCOME
IS PRICED IN, IT'S LEADING THE
HEAD, AHEAD OF THE FED.
>> IT'S AMAZING TO SEE IT BACK
TO 2.8% TODAY.
RICK WAS INDICATING THERE'S
SOMETHING AROUND.
>> THERE'S SOMETHING ABOUT THE
MECHANISM.
I DON'T THINK ANYBODY CAN
PINPOINT EXACTLY HOW MUCH OF
THIS EQUITY MARKET RALLY AND THE
REAL CALM AND STRENGTH AND
CREDIT MARKETS HAS BEEN BECAUSE
OF THIS POLICY.
I DO THINK BECAUSE THERE'S THIS
GREAT PERCEPTION THAT'S PLAYED A
HUGE ROLE, THAT ALONE COULD MEAN
YOU HAVE THIS NOISY ADJUSTMENT
PERIOD ONCE YOU GET EVIDENCE OF,
IN FACT, THE TAPER.
COULD STOCK PRICES AT 1800 AT
S&P PRICE IN?
COULD THAT BE COMPATIBLE WITH
GENTLE AND WELL TELEGRAPHED
TAPER?
SURE.
I DON'T THINK THE MARKET IS
NECESSARILY GOING TO ASSUME
THAT'S THE WAY IT GOES.
TO ME I SEE THE MARKET AS BEING
RAGGED HERE.
IT'S GOING TO BE SUPPLY COMING
OUT WITH SOME OFFERINGS LATER IN
THE WEEK AND SMALL CAPS ARE
LAGGING.
IT LOOKS LIKE IT'S STALLED OUT
AND RESTING FOR A WHILE.
BY THE WAY, S&P IS ONLY UP LESS
THAN 2% SINCE OCTOBER 29th.
SEEMS LIKE WE'RE COOKING NEW
HIGHS BUT IT'S BEEN SETTLING
BACK AND GOING SIDEWAYS.
>> WHAT ABOUT THE IDEA OF END OF
CRISIS TRADE WE'VE BEEN TALKING
ABOUT SELLOFF TODAY ON NBC.
YOU CAN PICK WHETHER IT'S THE
GOVERNMENT GETTING OUT OF
GENERAL MOTORS, EUROPE IS
STABILIZING, STOCKS ARE NEAR
ALL-TIME HIGHS AND THE TAPER IS
COMING SOON WHETHER WE LIKE IT
OR NOT.
WHAT ABOUT THE IDEA THAT THE END
OF THE CRISIS TRADE IS ABOUT TO
TAKE HOLD?
>> THE END OF THE CRISIS IS S&P
UP.
NOW WE'RE RECOGNIZING IT,
ACKNOWLEDGING IT.
I DID A PIECE LIKE OCTOBER OF
2012 TRYING TO TIMIDLY SUGGEST
END OF UNCERTAINTY IS COMING TO
AN END.
IT DIDN'T SEEM OBVIOUS AT THE
TIME.
I FEEL LIKE AT THIS POINT GOLD
CRASHED, EVERYTHING HAS FALLEN
INTO PLACE.
THAT'S WHY YOU NEED AN EARNING
SECOND WIND IN 2014 TO SUPPORT
WHAT THE MARKET HAS GIVEN YOU
THIS YEAR.
>> AMY, ONE OF THE MOVERS WE'VE
SEEN, IT'S INTERESTING, AS THESE
CROSS-CURRENTS WE TRY TO FIGURE
OUT WHETHER VOLATILITY WILL
SETTLE BACK INTO THAT YEAR'S --
YEAR-LONG LOW WE SAW PRIOR TO
THE LAST WEEK OR SO.
WHAT DO YOU THINK HAPPENS HERE
WITH THE VIX IN VOLATILITY AND
STOCKS -- YOU LOOK OUT INTO NEXT
YEAR.
IT'S PICKED UP A LITTLE BIT BUT
A LOT?
>> AS AN OPTION STRATEGIST I
WOULD LOVE IT TO PRICE WHERE IT
IS NOW.
ASBERNANKE/YELLEN, WE WILL BE
IN HIGHER VOLATILITY REGIME.
THE OTHER THING IS I WAS JUST IN
EUROPE FOR TEN DAYS VISITING
CLIENTS.
EVERYONE IS SO BULLISH ON THE
U.S.
I SEE SO MANY INCREMENTAL BUYERS
COMING IN IF WE GET A CORRECTION
I DON'T KNOW IF HAS THAT MUCH
ROOM, UNFORTUNATELY.
>> THANKS TO ALL OF YOU.
STOCKS ARE COOLING OFF TODAY BUT