The stage is set for him to run for president in 2016. Dont forget about the continuing obamacare disaster. Todays problem comes from the Insurance Companies on the federal exchange. They say the administration is forcing them to retroactively cover people wo dont sign up in time, and they may not be able to make it happen. A day after these angry tech ceos complained to president obamas face about nsa snooping, it now look like some changes are already in the works. All those stories and much more coming up in the kudlow report, beginning right now. Good evening, everyone. Im larry kudlow. This is the kudlow report. We live here at 7 00 p. M. Eastern, 4 00 p. M. Pacific. The fed taper and soaring stock market. Here is our very own steve liesman. Good evening, larry. Federal reserve essentially tea at least steps. a billion the treasuries. Second, announcing a schedule for tapering. About an even 10 billion monthly or every decline, every meeting. Third, very dovish guidance on Interest Rates, and how the fed will react once it hits that 6. 5 unemployment rate. I expect there will be time past the 6. 5 before all the other variables well be looking at will line up in a way to give us confess that the labor marge is strong enough. Some of es expected the taper, larry, but i think the dovish comments might be what excited the market. He said it may not be until december 2015. He was also asked about fed chair nominee janet yellen, and whether she approved of this schedule, and had el said she did. So markets dont have to expect much change in policy if shes approved this week, as expected, by the senate. Larry, back to you. Many thanks, steve liesman, appreciate it. It was a record day on wall street, as the stocks surged. Lets do go down to the floor with bob pisani. Good afternoon, bob. They were expecting two things, a modest and they would try to persuade the markets that tapering was not tightening and they better not screw up those expectations. Bernanke did not only screw up, he and the fed hit a home run for the markets. Practically a Pulitzer Prize statement. After a brief drop, stocks rallied with the dow closing at the highest for the day, up nearly 300 points. It was an historic closing high for the Dow Jones Industrial average, for the s p 500, and it was a 13year high for the nasdaq. Now, the yields on the tenyear treasury bond initially vacillated wildly, first rising, then dropping, but ending the day not far from where it was prior to the fed announcement. At the end, it was a very tame reaction. At for volatility, the vix, or fear index, a measure of how much protection traders are seeking, went down and it went down dramatically, about 15 . Indicating that bernanke is managing expectations in a way that is not causing the traders to run out and panic. It was an almost perfectly crafted statement that clearly said low rates were going to be around for a very long time, and second, it clearly said that there is no preset course for this taper. So if the Economic Data worsened the fed could stop the taper program or even reverse it. The fed threaded this needle as well as could be expected. Larry, back to you. All right. As always, many thanks, cnbcs bob pisani. Lets welcome theial star panel. Frederick mish kin, currently economics professor at columbia. David malpass, and seema former president , cnbc market analyst kenny policy cari, and jim iuorio. I go to you first, rick. Is this Forward Guidance as dovish as wall street is making it out . I guess thats what wall street liked today. Is it that dovish . Yes, i think it is. Very clearly they want to differentiate between the two tools that are being used right now. In particular, the fed has problems with the asset purchase program, because it creates a Balance Sheet problem for the fed. So they wanted to basically pivot from using that kind of approach to one which focuses on something thats much more straightforward, which is to actually commit to keep Interest Rates low. In my lifetime, will they ever raise Interest Rates . We better hope so. They waived the unemployment targets, very interesting, not that the target is such a great thing, but a 6. 5 unemployment targets, he basically trashed that, basically gave the message, you know what, guys . My predecessor janet yellen and i agree, were not going to raise rates until we feel like it, and thats a long time from now. We have no benchmarks, no targets, no guideposts, no real rules, trust me. Trust me. You were on the Federal Reserve board, so youre probably going to say yes. No, but i dont think thats the right characterization. What i love about being on with you is we can yell at each other. Part of the fun. The Federal Reserve is very focused on inflation control, as it should be. The problem is that inflation is too low. So the when you think about focusing on unemployment, that may only make sense relative to what you think is the natural rate of unemployment, where inflation is not going to pick up with this fed, and janet would definitely pursue this, you want to push the envelope. We feel the natural rate may be lower than we expected, we see inflation being lower. Just a second, close his eyes, go around and try to touch and find the right button to push. Just sort of go around, i want to see where i am here, and then ill know when to push the button. Thats exactly what you have to do. You have to figure out whats going on. Look, my first job, open market operations, i was a grunt. Great stuff. But one last point. You do want to make sure you have an inflation goal and stick to it. Dave, im a weird bird. I dont want the fed first of all, a minor point, i dont want the fed to reinflate the economy. If we could have zero inflation price stability that would be a great permanent tax cut. But i want to ask you what message you took away today. Its very interesting. Wall street journal, top of the website, fed begins easy money pullback. Now, rick and bob pisani and others are going to say, no, the stock market thinks the fed will never tighten in our lifetime, so something is right here, and somebody is wrong. Right, though its complicated, i think what we can all agree on is the fed is mass i have beenly powerful. Everybody is staring at them. My read of what they did today was finely taper. The market has this giant sigh of relief. We have that problem off our backs. People have been totally uncertain about when and if they would reduce their bond buying. So i dont think i dont agree that the fed has much of a crystal ball to know when theyll actually begin raising the fed. No, im saying they dont have a clue. Thats my problem. I think we would be much better off if they had some basis point on the feds fund rate. We would have the interbank markets working, the fed fund markets working. Those markets have completely frozen up. Dont get my wrong. My blind mans bluff here, im saying they dont have a clue. Im not here to be fair. Im here to be opinionated. I want to ask you this, in this spirit of unfairness, five years. Weve all kind of been working together. Jim iuorio has been with us the whole time, rick has been an adviser, dave has been an adviser to the show, with good advice. Has the fed been progrowth . Has the policy worked . Maybe wall street is cheering because the policy is coming to an end, but has this zero Interest RatesBalance Sheet building policy worked . I think absolutely not. The evidence is pretty clear. The growth rate for the country has been miserably blow. Real incomes have been declining. Medium incomes down, so the policy works for washington, d. C. It works for welltodo people. They can borrow money against their assets, but the fed basically has subsidizing the risk at the expense of the general growth rate and the unemployment rate, so as a practical matter, if they had stopped buying bonds, the way we saw them tapering today. If they had done that two years ago. We would have had more employment i could couldnt disagree more. You disagree . Go ahead. The issue is the alternative. You have to think about what what it would have been like if the fed didnt do this. I would say that the situation would have been much more. The problem here is not the fed cant get growth going. We have all these things. How did ithow did it make sense for a part of the u. S. Government to own 4 million. It could be the right policy. But if the maybe the crown would have been i dont buy that at all. Guy, guys. Jim iuorio, i know up to weigh in with everything that David Malpass has said, but let me ask you this. What is your reading on the following . Longterm tenyear rates hardly moved today. On balance they went of a smidge, but thats all. Number two, the price of gold went down, usually a sign of tightening, and in other words, im trying to figure out whether markets, particular ly r because the fed will stay easy for the rest of my lifetime. Whats the answer . I think the currency market and gold market realize were being gamed to a certain extent. He was going to taper today. In maybe when he talked about it, things got a bit out of hand, the only way the markets were going to digest this medicine is if it came with the sugarcoating of wildly and i believe that everything was on the up and up, and straightforward in what he was thinks, but if he was worried about Balance Sheet, he would cease so the think the currency markets got it rik. I think the the fact is were in taper, in the world of taper. So i think thats what happened today. Agreed. I want two quick comments on what iuorio said. Youre first. Im still baffled. Is it because the markets rallied today because they think the fed is beginning the easy money pullback . Thats the wall street journal website, or because the fed was totally dovish, as jim iuorio and kenny was suggesting . Totally dovish, the Forward Guidance was dovish, the whole business about et cetera, et cetera, which is it . I think the market looks at action. The action we saw today was the tap taper. So thats good news for the country. Were going to get the fed off the thumbs each meeting. Each meeting. So if it will be over by october . I think it will be over faster, because it will be so well received. Think if they do in the next meeting 20 billion, the market is going to go up even more. But only if only if the macro data if the data starts to weaken again in your experience as a former governor, how dodds this . I think the real issue is they got it right this time. There was a problem in september where i would have preferred they taper then, with again very dovish expansioniaries policy. They blinked, because they were very concerned about what was going on in the markets. In this case, a lot of things have come together, particularly one of the elements that was very key was that they had a deal made in congress, so we wont go through the shenanigans. No shutdown. Very important. Paul ryan hero. What they wanted to do here, they did not want to have the situation where the fed policy created more uncertainty. This is a good outcome. They basically decreased uncertainty, also made it very clear that tapering does not mean a tightening of policy. We have more coming. You want to weigh in real yik . Yes, its happy that they started tapering, but i think its much more the dovish comment. He sugar coated it, doing the right thing in a mechanical sense, helping the portfolio problem, which is gargantuan. No one in the world knows what theyre going to do with this 4 try wrong balance, but he sugar coated it. Were going to get out of here. Everybody please stay. We have much more to do. I want to know im probably going to iuorio first, was this really a 300point day. Did better nangiess comments really worth that. Later in the show congressman paul ryan looks like a winner tonight. Hell join us in a few minutes to talk about restoring pension benefits for disabled vets, saving the gop from itself, and is he running for president in 2016 . Dont forget, free market capitalism is the best path to prosperity. I think we got some free market capitalism with a less interventionist fed, but i tell you folks, im not exactly sure. Im kudlow. Please stay with us. Im groping around to try to you understand this whole story. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Thats what they can do with you. Stick with innovation. Stick with power. Stick with technology. Get the new flexcare platinum from Philips Sonicare and save now. Philips sonicare. [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back. Lets bring back our panel. I want to give you a whack at the ball. We dont have too much time in this segment. I think bernanke did what was predictable, but whatever, the point is, is this really a 300point day . How do you trade the market from here . I think it is. Think about it this way. For the last five years, weve argued this, but to some extent ufz to agree that much of the rally was related to the feds accommodations and depressing rates. Some of it. But what the market always would have rather done is really on genuine economic growth, which we have started to see over the last month if the punchbowl wasnt going to be taken away. He assured the markets that, yeah, the numbers are strong, but i wont be quick to pull the punch away. I think you have to pick your spots in the market. I was looking at financials today, because i think the yield curve is going to steepen. He wants to deep that he says he wants rates to go lower. A quick editorial comment. He said it again today, in the fo1c direct i have been, he said well continue to do this, because we want long rates to be low. Im going to make an observation. The Federal Reserve does not control longterm Interest Rates. The market does. Ken policari, was this worth 300 points today . I dont think so, jim. Im opposed with you on this. I dont think it was worth 300 at all. When the news first came out, the market sold right off, right down to the 50day. Then when the clarification started coming out about sugar coating it and keeping rates low, thats when you saw the market find some support and rally right up to where . Resistance, 1811, right up to resistance and back up. I think the market is overdone, i think the market will digest, come back in. I think were stuck in this 1775, 1800 trading range out to the end of the year. You guys are setting too high a bar. This is washington, d. C. If they do something thats not a real screwup, we have to cheer. The fed did a decent job today. Paul ryan did a decent job over the week, and small changes in the right direction. Im going to put patty murray in that. Shes a democrat. She got a phone call through to obama. Great job, patty murray. Did he call ryan . Remember, the night he came out with the deal, he said he liked it. He didnt call. Dont forget the stock market has rallied through a lot of colossal bumbles. But youre right, rick, in the directive and the press conference, the fed said headwinds are being removed. I would say a threatened shutdown would have amounted to a fiscal headwind. More important issue, the debt limit. Which is coming. The fact that the heat has gone out we dont know that. I asked ryan about that. Youre going to be around. I asked ryan specifically about what they want from a debt ceiling. He didnt really answer the question. Were going to move on. David, ken, jim iuorio, fred, rick, but now it looks like that toplevel tech ceo meeting at the white house already getting results. After 9 ceos let president obama know just how angry they are about the n selfa snooping, it looks like the administration is recommending big changes to the surveillance techniques. Cnbcs Morgan Brennan has that story and more headlines to come on the kudlow report. [ male announcer ] if we could see energy. 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Morgan brennan joins you with what looks like a Quick Response for the white house. Is it true . Thanks, larry. Actually the white house has been working on revising the nsa program for a few months, but that meeting with tech leaders like apples ceo tim cook and Sheryl Sandburg yesterday probably greased the bheels. A panel recommended that the nsa no longer keep a database, and also called for much more restrained when it comes to tracking foreign leaders, but these recommendations are just that. The Obama Administration said it will announce what changes it will actually make. Also late today, a federal jury found former s. A. C. Capital fund manager Michael Stein berg guilty. He faces a heavy prison term whe