Closely. Crude is back below 37. There hasnt been a rate hike since 06. That decision will come out at 2 00 p. M. Eastern time. Chair yellen scheduled to hold a News Conference a half hour later. Cnbc will bring you complete coverage of the big fed event. Reminders of where we were on pop culture on june 29, 2006. Its been a long journey. Its been a long journey this year as we agonized about whether or not they would raise rates. During the course of that year, the stock market is basically more or less where we started. The tenyear treasury is basically, after this back and forth during the course of the year, basically back where we started. The big mover is the dollar index. The euro down 9 . Thats partly you what see in the corporate earnings. You do have oil down sharply. You have the junk bond market reeling despite the fact that Interest Rates have been so low, we have seen record high yield issuance this year again, emerging markets are weak again. Weve been asking the question, simon, did the fed miss an opportunity in september . We said then, is this a gamble on whether you think the Global Economy will be weaker in three months or stronger in three months . The jury was out, but its a tenuous economy the fed is raising rates into. Particularly the industrial economy. The last couple of days we got warning from 3m, when from ke a kennametal, and this morning, dover corp, stock not down much, but another reflection of the industrial economy slowing. A lot of it due with oil and gas. Kennametal and dover connected to that part of the economy. That gives people pause. They say 25 basis points, not a lot, right . Thats the game this afternoon, to convince everybody that its going to be gradual rise from here. What will be helpful for many people in the market is if the dots explicitly come down, those individual projections of where were going from Interest Rates from the members of the fomc, if they come down, that will ease the rate rise today. Question whether they will say anything in that in the statement or leave everything for the News Conference with janet yellen. Her clear aim is to convince people that rates are rising slowly. Albeit with inflation growing. The problability according t the street, 76 for that rate hike to come today. If they dont do it, the credibility is shattered surely. The market will see intense volatility. Market turmoil happens when analysts and when Market Participants are surprised, shocked by a move they did not expect, had not prepared for and priced in. For more on the fed and what a rate hike will mean for this market, the chief economist from steiffel and jim paulson from Wells Fargo Capital management. Lindsay, if they raise rates today what will that mean. We are expecting, given the strong rhetoric we heard from the fed and the chairman of late for that 25 basis point increase to occur this afternoon. That being said, do we think thats the appropriate policy move . No. Do we think the data supports liftoff at this point . Certainly not. The chairman in her latest comments said neither side of the feds dual mandate has been met. If we see that 25 basis point increase, we expect it to be accompanied with a dovish statement. Still a sluggishly low level of inflation. If the fed raised Interest Rates 18 months down the line, you wouldnt have expected them to reach the milestones. To be fair f we look at 2004, inflation was 1. 5 , wage pressures were well over 3 . They were confidence that inflation was on the rise. We look at the late 90s, inflation well over the feds longer term target. This time around the fed is talking about an expectation of meeting that in the nearterm with no data of that coming down the pipeline. The fed backed themselves into a corner based on a promise to the market, not a data stance. Jim what is factored in here . The stock market gained yesterday. Well have a higher open today. You have the tectonic plates shifting. The dollar, oil as kayla points out, at the same time high yield credit. Where are you on this now . I guess what i focus on today is a bit about what im concerned about in the upcoming year, playing out starting today, i think a bit. Lindes tou lind lindsey touched on this. We have had slow growth, since we had no inflation pressure, zero Interest Rates, no challenge to Profit Margins, we could have maximum Profit Margins and maximum valuations, thats whats changing. I think that will change more. Im concerned about stagflation, if you will. Thats the nemesis of todays tightening is stagflation. As pointed out, real growth is not up to par to tighten. The reason well tighten today is were concerned that wage evidence is creeping up, core consumer inflation is coming up. We have to tighten not because real growth is good but because were concerned about nominal growth. That smells like stagflation. Imagine if you will in the next year if the dollar weakens and Commodity Prices lift on top of rising wage inflation, we still have very sluggish real growth, the fed has to accelerate tightening even though we have sluggish growth. Just for the record, jim, many people in Financial Markets dont remember the last time that Interest Rates rose. They may not remember what stagflation means. Stagflation is rising inflation, rising unemployment . Rising inflation with weak real growth. Right. The combination where the fed has to raise rates because inflation is rising, but real growth is still sluggish. We havent had this for a long time. We certainly havent had it in this recovery. If ask you me what the market is prepared for, i dont think its prepared for that. What do you think some unintended consequences on the consumer side may be . We are in a period of record auto sales. We have seen buybacks funded. Do you expect any of this activity will shift or do you think that companies and consumers have already been reacting to this specter of rising rates . Maybe on the business side theres been an anticipation of rates going up. Consumers have been told rates are on the rise for the past several years. Its more of well believe it when we see it. The initial 25 basis point increase would not have a marked effect on consumers. As we continue dont line and see subsequent rate increases, that will translate into higher financing costs for autos and large ticket purchases like homes that will eat into the consumers ability to afford those large ticket purchases. If the fed raises in december, they have to follow up with an additional rate increase in the next several months to emphasize that the december liftoff was the correct move. A one and done would leave them flailing in the wind. So nearly 50 basis points will have a negative impact on the consumer against the back drop of near nonexistent wage growth. Consumers under significant pressure at this point. Yeah. Im trying to remember if there was a time when people in Financial Markets welcomed a rate rise, well leave it there. Thank you. Watching the fed just a few hours after that final republican president ial debate of the year held in las vegas. John harwood is at hq today with highlights. Good morning, john. Good morning, carl. I want to go through some of what i considered the nomost important exchanges in that debate. You had a debate in which jeb bush, who was lagging in the race, was much more aggressive, especially going after donald trump. This exchange was kicked off when donald trump reiterated his complaints that on immigration, on Foreign Policy jeb bush is weak. Watch these two. When jeb comes out and he talks about the border, i saw it, i was witness to it, so was everyone else, i was standing there, they come across as an act of love. Hes saying the same thing right now with radical islam. We cant have that in our country. It wont work. We need strength. Governor bush . Donald, you wont be able to insult your way to the presidency. Thats not going to happen, and i do have the strength. Good moment for jeb bush. I dont know that it hurt donald trump who went in as the frontrunner, comes out as a frontrunner. More interesting was the undercard debate on the main stage. That is to say marco rubio and ted cruz are competing to be the alternative to trump among the mainstream candidates. Cruz has been rising. Rubio tried to hit him using his own weak points saying that ted cruzs position is similar to marco rubios on immigration, which rubio has been criticized for. Watch how they went back and forth. Im always puzzled by his attack on this issue. Ted, you support legalizing people who are in this country illegally. Ted cruz supported a 500 increase in the number of h1v visas, the guest workers who are allowed in the country and ted supports doubling the amount of green cards. He is attempting to muddy the waters, there was a time for choosing as reagan put it. There was a battle over amnesty. Some chose, like senator rubio, to stand with bobama and schume. Cruz has been rising in iowa leading donald trump there. Rising nationally. I think he got the better of that exchange. You also had another candidate in New Hampshire trying to break into the top tier. Thats chris christie, the governor of new jersey. Hes been doing well in New Hampshire lately. He used the cruz rubio exchange to belittle both candidates as people who didnt have experience to make executive decisions. Listen to the governor. This is what its like to be on the floor of the United States senate. I mean, endless debates about how many angels on the head of a pin from people who never had to make a consequential decision in an executive position. Those were the exchanges that americans will be left with heading into the holidays. Once we get after new years guys, we still have a full month to go before the Iowa Caucuses and New Hampshire primary with more debates ahead. Thats good. Thank you very much, john harwood. When we come back, the impact that a fed rate hike could have on the banks. And later, sallie krawcheck, she was cfo at citi the last time the fed raised rates. Announcer through sunday at sleep train, get up to 48 months interestfree financing on tempurpedic, save 300 on beautyrest and posturepedic, or choose 300 in free gifts with Stearns Foster. The triple choice sale ends sunday at sleep train. Industrial production is out. Lets get to Rick Santelli. Wow. Okay. If we look at industrial production, it was down 0. 6, last time 0. 4, now down 0. 10. Heres the running totals, we have eight negative numbers two positive numbers, one zero. Not a good record if youre monitoring manufacturing. Lets get to the utilization rate. 77, also a disappointment following 77. 5. And 77 is the lowest rate of the year. Its actually the lowest rate going all the way back to january of 14. Heres another interesting little tidbit. We have not had a 79 handle on utilization rates all year. But yet we finished slightly over 79 at the end of last year. So it gives you this feel of the deterioration both sequentially on a month over month and year over year basis. And this is something we need to Pay Attention to. It may only be 12 of the economy, but it leverages up nicely as a good multiplier, when youre handle is on gdp, you will take it anywhere you can get it. David faber, back to you. Wanted to update viewers on battle weve been following between Norfolk Southern and Canadian Pacific. This morning Canadian Pacific having a call because they also raised their bid or potentially raised their bid for Norfolk Southern, a rail theyve been seeking. Norfolk southern is saying not a chance, no way. We dont think this could pass regulatory muster. They include a socalled contingent value right in their consideration that would be paid to shareholders should the combinati combination, if it ever comes to be what a stock price that does not average at least 175 bear with me between april 20, 2017 and october 20, 2017. The ccdr would pay up to 3. 4 billion to shareholders to take into account the differential if there should be one of 175 and wherever the combination stock price would be. Another way theyre trying at cp to increase the overall value of the deal to get Norfolk Southern shareholders to bang on the boards doors and say Pay Attention. Unclear if that will work in any way, shape or form. We did want to share it with people. Well have more as we move along. Bill ackman pulling strings. Bill ackman, large holder of cp. Banks are rising ahead of the fed decision. How might a rate hike impact the banks . Kayla tausche is here with some answers. We talk so much about the financials in the prism of the fed and so many people have tried to play this sector. Largely for the last couple of years its been a false alarm. These banks raise every time a rate hike is mentioned. Banks can lend out or reinvest the excess deposits they have at higher rates once the rates go up. On the flip side, as loeans get more expensive, defaults rise and they have to pay more to consumers for savings. This will benefit them, but not by 25 basis points but at 100 basis points, bank of member saamerica is expected to see a interest of 4. 5 billion. J. P. Morgan 3 billion, citi 2, Morgan Stanley 4. 1. And the regional banks, which people have been buying, have been tough to pin down because they have a lot more exposure to energy loans, thats a variable nearly impossible to solve for this time around. Any bump wont happen overnight this will be a gradual hike. Its been telegraphed as so. It could drag down oil, strengthen the dollar. Trading for the banks has been declining for this quarter. Analysts have taken First Quarter earnings for the banks way, way, way down. But if you are willing to be patient, history shows the bank trade does pay off. According to the last four socalled first rate hikes, universal banks sold off the week after, perhaps too many people buying into the rate hike, and then not seeing that immediate lift so they selloff. Six months later a sharp rise for the big banks, even though the s p subgroups are negative. A year later, some of these names have even so much as doubled in the stock market. Its probably going to take about a year to get you to that 100 basis point hike level any way. And you could see some loan demand come off as well. But its still very interesting to note how many different levers, even 25, 50, 75, 100 basis points do. And if its a normal rate hike cycle or if they cut in a year. Thats right. One and done or something else. Well see you later on later on, we will talk with former fed governor randy kroszer, part of a big day lineup including fef gundlach, leon cooperman, bill gross. train horn vo wherever our trains go, the economy comes to life. Norfolk southern. One line, infinite possibilities. Just about six minutes to the bell. Less than five hours from the fed decision. Lets get to art cashin here at post nine, director of floor at ubs. You long said you did not see a hike coming this year. Seems like theyll sneak one in before the bell, but youll still be watching for dissents among other thing. Usually yellen likes to go for unanimity, but i think today dissents will be helpful because it will tell the world were in no real hurry. We have disagreement on the board, dont expect us to keep coming again and again and again. So multiple meaning more than one . Yeah. Theres a possibility of three. Youve got tarullo, branard and evans. If they dont push hard, they think it through, there may be some dissents. Its a market thats been troubled by oil and high yields. Yesterday we got a rebound from that. December has not been kind. No, it has not. We may begin to see another cycle of pressure on oil building up. Im not sure the high yield thing will have a major effect. Rather narrow. Its not in the trillions. Its in the billions. So i think its kind of insular. I would worry about oil if it comes down and makes another low. Some peoples christmases are not made until we talk about a santa claus rally. Do you think there will be one . I think there can be unless theres a particularly negative reaction in Something Like the emerging market currencies to the fed move. I think what youve seen over the preceding days, operation week in december, one of the better weeks of the year. Two days going into a fed meeting, better rally time. They all worked handedly. So this market, which is still oversold despite those rallies, could enjoy a seasonal pattern. Good chance we talk to you in a while. Theres a possibility. Thank you, art cashin. Four minutes until the opening bell. Announcer sundays your last chance to save big during sleep trains triple choice sale. For a limited time, you can choose up to 48 months interestfree financing on a huge selection of tempurpedic models, or choose to save 300 on beautyrest and posturepedic mattress sets. 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