Spending plan without any drama. Will the agreement help with the recovery. Rate watch, could todays decision cause Mortgage Rates to spike making it more expensetive to buy a house and throwing a wrench in the economic turn around . That and more for nightly Business Report for wednesday, december 18th. Good evening everyone. All those months of taper talk are done. The Federal Reserve said today it will begin winding down the landmark Stimulus Program, a process wall street dubbed the taper. Starting in january, the central bank will cut back on the huge bond purchases by 10 billion a month. Why now . Speaking at his last press conference as fed chairman, ben bernanke said the economy is healthier and the job market is making progress. This marks the beginning of the end of the historic Money Program that lunched in 2008 to stabilize the economy during the deb tating financial crisis. The reaction was surprisingly positive. Stocks skyrocketed and the dow and s p 500 hit new record highs. The blue chip dow soared almost 300 points rebounding and closing well above the 16,000 level. The nasdaq jumped 46 and the s p surged almost 30 points. Over in the bond market, prices on the tenyear treasury fell and yields rose to 2. 89 . We have two reports on the feds big decision, the massive record setting reaction in the stock market. Bob has that story but we begin with Steve Liesman on what the fed did, why and what the chairman said about it in the last press conference as central bank chief. Out going Federal Reserve chairman ben bernanke, a historic move engineering the 10 billiondollar reduction with the purchase of assets by the Federal Reserve to take effect next month. It is the last press conference for Federal Reserve chairman ben bernanke in the second to last meting and when he explained why the fed felt comfortable reducing it. Progress towards the economic objectives will be sustained. If the incoming data supports the committees outlook, well likely reduce the pace of securities purchases in further measured steps at future meetings. Reporter bernanke suggested the fed would reduce the monthly qe in measured inkments, sounded like 10 billion a month, reduction depending upon the economy. He said the course of reductions is data dependent but said when the fed hits the 6. 5 unemployme unemployment threshold and it would remain on hold once they hit the 6. 5 unemployment rate. We couldnt put it in terms of unemployment. I suspect it will be time passed the 6. 5 before all of the other variables that well look at will line up to give us confidence the labor market will sustain the beginning of increases and rates. The last meeting is in january and janet yellen is supposed to be confirmed this week as his replacement. Bernanke was asked if yellen supports the program and he said she fully does. Policy is expected to be pretty much the same under janet yellen as it was under fed chairman ben bernanke. For nightly Business Report im Steve Liesman. The markets had been calm going into the fed statement indicating that many in the Trading Community expected mr. Bernanke to find a way to taper the bond purchases this month or early next year, but they are also expecting him to calm fears the fed will raise Interest Rates any time soon. He delivered on both counts. After a brief drop, stocks rallied with the dow jones closing at the highest for the day up almost 300 points, it was a historic closing high for the dow industrials and a 13year high for the nasdaq. Yields on the tenyear treasury bond initially vacillated wildly, 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 Chain Reaction in the bond market. For volatility, the fear index, a measure how much protection traders are seeking against market declines went down, and it went down dramatically, about 15 . That is a very large drop indicating bernanke is managing expectations in a way not causing traders to run out and to panic. The bottom line, this was an almost perfectly crafted statement that clearly said first, low rates were going to be around for a very long time, and second, clearly said that there is no preset course for this taper program. So if the Economic Data worsened, the fed could stop the taper program or even reverse it. The fed thread of this needle as well as can be expected. We turn now to mohamed for his prospeerspective on todays decision, hes the director of pimpco the Worlds Largest bond fund. I know you think the fed did the right thing. Tell us why and what does this mean for consumer investors and businesses . It means the most for investors. Mr. Bernanke gave investors a Big Christmas present with three parts to it. He removed the uncertainty when the fed will taper and how. In fact, in the press conference, he even gave us a road map for the next 12 months. Second, they compensated what they are taking away with a lot, in particular they said Interest Rates would remain low for a long time and thirdly, they upgraded their economic projections. So put all that together and the markets love this. For investors its great. For businesses, its quite good because it increases the wealth effect and therefore households are better off. But for the average person and particularly the unemployed person, it is not clear whether this will materially influence their outlook. You know, mohammed, mr. Bernanke was asked today and it was a question he didnt really seem to have a particularly adroit answer to, that is why hasnt quantitative easing or the the Stimulus Program created more jobs than it has, or has it at all done that . Do you say . I think what it has is avoided something much worse. Im with him when he says the counter factual would have been much worse. Im also with when he says we dealt with unexpected things from the European Crisis to what is happening on capitol hill. Fund mentally, its not a perfect instrument. Its the asset channel, its about making you feel better so you go out and spend more and business investors. Its a very indirect way of stimulating the economy, a much better way would be public investment, removing longterm uncertainty, doing all this other stuff. Unfortunately, the fed is the only policy making entity in play and therefore, they are using im perfect policy and they are getting inperfect results. One thing that we kept hearing today from chairman bernanke is that this promise, this reassurance that Interest Rates will stay exceptionally low, and we know that the markets, the stock market has rallied on these low Interest Rates. So can we expect that through 2014, and does this change your approach to investing in stocks and bonds . So clearly, what they want to do is maintain control of the short end of the yield curve. Why is that important . Because of the mortgage rate. They dont want to shock the market because its a critical element of the recovery. So they are using aggressive forward policy guidance to try to convince people that shortterm Interest Rates are going to remain stable. And today, they largely, largely succeeded on the short end. Its amazing that we had 300 points on the dow and yet, the bond market was very well behaved. In terms of what it means, you heard us say this over and over again, susie. Bill said it, ive said it. Be careful of where you invest on the yield curve. Do not go out 30 years. Do not go out 20 years. Thats dangerous territory. Stay focussed and concentrated on the shortend of the curve. Thats where the value is and safety is. All right. Lots of great information. Thank you so much, mohammed. Hope you have a happy holiday. You, too. At his press conference today, ben bernanke is pleased covering the next two years and likes the way it looks. Relative to where we were in september and october, it certainly is nice that theres been a bipartisan feel. Its also at least directly what i have recommended in testimony, which is that it eases a bit. The fiscal restraint in the next couple years, a period where the economy needs help to finish the recovery. And tonight, that deal is a done deal after the Senate Passed it late this afternoon. John harwood joins us from washington with more on todays vote, and what it means. Were there any surprises, john, in the vote . No, the democrats voted, 55 of them in favor. You had three fewer republicans voting yes than voted to end debate earlier in the week. So it was a 6436 vote. But this is something that both parties wanted to and both partiess leaderships even though Mitch Mcconnell voted. Both leaderships wanted this to happen for the reason ben bernanke expressed. Its not often washington gets a chance to please anybody but markets wanted this, the country wanted this. All right. So now that they are all getting along in washington, will that carry over to 2014, john . To a limited extent, susie. There will not be a shutdown when the government runs out of money in january. They will extend government funding along the lines outlined by the deal, and i think that even though some republicans said yes, well make demands for the debt limit, i dont think they will push it to the brink so well is a smooth process on the debt limit. The question is can we get anything bigger than that . Can we get Immigration Reform . A grand bargain . That is by far from clear and actually unlikely. So if you have a twoyear deal on the federal budget, then if the debt limit debate becomes contankous, what would the gop look for to let administration raise the debt limit . You certainly could have them return to issues of obamacare, that they have loved to talk about during 2013, want to talk about in 2014 while they are trying to retake the senate, hold the house. You could have them hold out for things like the keystone pipeline, which is something thats been an issue for republicans. They used that as a job issue against democratics. Those are examples. Again, i dont think they are willing to take that to the max. The Republican Party was wounded badly by the shut down in the fall. I dont think they want to repeat the same experience in 2014. Conversation tb continued. Thank you so much. More now on how the feds decision to taper could impact treasury yields and Mortgage Rates. Many home buyers and sellers are worried those rates will rise in 2014 making homeownership more costly. Diana olick reports. Reporter at apex home loans, lender craig watched todays fed announcement with intrepidation worried Mortgage Rates might spike. I was relieved how they reacted so far and we didnt see a sharp rise as a result of the fed tells us they will taper. That certainly could have happened. Reporter the mouderate pull back did not push rates significantly higher. The average rate is 4. 75 since the middle of last week but concern over the feds potential move today may have been behind a sharp drop of applications to the lowest level in a dozen years. Mortgage Interest Rates generally hate the idea of uncertainty. So uncertainty is not a good thing. So this definitely brings some certainty in terms of the fed showing cards as far as the direction of rates. Reporter this is not the end for rate moves. The Federal Reserve is just beginning the pull back and this week the regulator for fannie mae and freddie mac announced they would raise dramatically the fees they charge to lenders with medium credit quality. Those fees will be passed on directly to borrowers. The bigger of the two announcements was fannie mae, if youre a firsttime home buyer looking to put less than 20 down, you could see Mortgage Rates rise, you know, by as much as 4 10ths of a percent. Reporter while it doesnt sound like a lot, combine that with rising home prices and last lucker growth, First Time Buyers will continue to struggle even to make the necessary down payment. I think absolutely the rate increases will be painful. Reporter just not as painful as they could have been had the fed made a bigger move and beginning the bond buying retreat. For nightly Business Report, im dianna olick in washington. A rough patch, as the Company Reports earnings, does it have a plan now to get back on track . Guilty on all five charges, the jury verdict against money manager michael steinberg. The Hedge Fund Company run by stev steve co cohen. The Portfolio Manager is the first of eight criminally charged employees to face trial for Insider Trading in the shares of several technology companies. Six colleagues have already pled guilty and one more defendant goes on trail in january. The verdict is 76 without a loss. The number of Insider Trading prosecutions brought by the u. S. Attorney since 2009. Earnings from oracle topping 9 billion dollars but profit last quarter was one percent lower on a slight drop in new Software Sales and subskripgss. They are offering cloud comp pugss and the troubling outlook for the next year. Josh lipton now with more. Reporter larry elson built oracle generating billions in revenue with 120,000 employees and 400,000 customers. Corporations around the world use its software to help manage the businesses, everything from Human Resources to accounting. Along the way, ellis son built himself a fortune, forbes pegs his net worth at 41 billion. But in recent years, the Technology Landscape changed dramatically the and Software Giants future isnt as clear. They are dealing with a weak tech spending environment, which is a reason executives offered cautious guidance in the past there are issues specific to oracle. They offer webbased software sold as subskripgss, rather than licenses. It departments orphans of the cloud because it can help them save cost and stream line operations. Analysts say their survey work shows 38 of the customers are using sales force, way up from a year ago. There are a lot of things going on in the software sector. Reporter an Equity Analyst says they missed the cloud trend, on track for the smallest yearly gain since at least 1987. The fact they are in catchup mode is a damper on the stock price as they watch others seeing greater growth from this new business model. We worked again and reworked. Reporter oracle is fighting back. The companys database designed for the cloud announced in july could see growth pick up next year and despite the issues oracle is facing, they think its valued. They used to think of it as a corner stone investment. The question is whether ellison convinced them it still is. Four shares shifted down after the auto maker predicted a bumpy road the ahead. Cost of lunching a Record Number of new vehicles will reduce profits which could fall by 1. 5 billion. The forecast caught investors off guard sending shares 6 lower to 15. 65, the worst oneday drop in two years. General electric expect as double digit Profit Growth in the industrial unit next year. So it now expects profits in aviation, health care, and other areas of its businesses to rise at least 10 next year. Ge said it also plans to continue aggressive investments in manufacturing in 2014. Shares rose more than 1 to 27. 41. Some Key Management changes at boeing today. The company promoted the head of defense to the post of chief operating officer and named two other executives vice chairman. The moves might be part of the ceo Succession Plan since chief executive retires next year. The stock fell slightly to 135. 49. Fedex reported an earnings missed and blamed it on a drop in revenue in the biggest unit, express deliveries, despite the numbers, the Company Forecast add strong Holiday Season and outlook for 2014. Shares were up a fraction to 139. 72. General mills lagged estimates, the packaged food company saw sales slide in part because this late thanksgiving meant the Quarter Ended before the holiday. Increased commodity cost and unfavorable currency changes didnt help the scereal maker, either. Harland clark, a bank check printer said it would buy the Public Community for 1. 8 million. They have newspaper inserts and coupons. The company said the deal would create a company with more than 3 billion in combined revenue and that sent shares of valassis way up. Shares of Amc Entertainment rose in the first day of trading. The theater operator raised more than 330 million in the market debut. The ceo said the companys success is in the business model. Not just adding more theaters but making them a little better. We find that rest significant nates with our guests and when they come, they spend more money and makes for a Good Business model. That stock ended the day at 18. 90, up 5 . Another delay for the healthcare. Gov marketplace. This may help Americans Still shopping and figuring out how to pay for a plan. The industr