Wasting time on the failed promises of Big Government or the divisive rhetoric of class warfare. Senator rubio about to engine me to talk about his plan to finally spur real Economic Growth and keep america great. All those stories and much more coming up in the kudlow report beginning right now. Good evening. Im larry kudlow. This is the kudlow report. Were live at 7 00 p. M. Eastern and 4 00 p. M. Pacific. We have late breaking details on the still missing Malaysian Airline flight. Reporter its now day four since it went missing simply disappearing off the radar scopes. And government officials here by their own admission are perplex perplexed, they are puzzled about the circumstances. We have had a lot of false hopes, a lot of false alarms. The latest, an oil slick, the fuel from that slick has now been analyzed and has been ruled out. It is not connected to mh 370. The situation becomes even more desperate and frustrating by the hour. But the surgery is nearch is no called off, in fact it is being intensified, redoubled and the search area has now been extended to 100 nautical miles. It now involves 74 aircraft and planes, including ships from the u. S. 7 fleet, the uss kidd has joined the search and rescue efforts. This operation has still been classified as a search operation, not yet disaster recovery. The search continues. Back to you. Thank you, sri. Now lets go to the latest from ukraine. Russia tips to tighten its grip on the crimea region. Ian williams with us now with all the latest developments. Good evening, ian. Reporter the ukranian Prime Minister is preparing to leave ukraine and travel to the u. S. Hell be meeting president obama in washington and also addressing the u. N. Security council in new york. His message is likely to be the same one that he took to Independence Square in kiev sunday telling thousands of protesters there that ukraine would not cede as he put it a september meter of soil to russia. Brave words, hard words, but here in crimea, it looks like russia is really consolidating its control. Already they surround, they block aided most of Ukranian Army bases. Today they took control of a Military Hospital here and there are also reports of fresh reinforcements coming just days before a referendum on the 16th of march of which ukraine will be asked whether to leave you ukraine and join russia. Russia seemingly in a real hurry to annex this peninsula. Now at the weekend, we saw rallies, pro ukraine and pro moscow, two here and two in the home of the black sea fleet. Tension really rising just days before this referendum. Larry. All right. Many thanks to ian williams. Now switching gears back to the u. S. , senator marco rubio attempting to fight economic pes civ pessimism with a new growth agenda. Senator rubio joins us live. As always, great to see you. You know, jack kemp was a mentor, a great friend of mine. Going back to the mid and late 1970s. He was for growth, opportunity. Right now all i hear, inequality, stagnation, pessimism, get idefeatism, puni success. How can you turn this around . Because in some sense turning this around can turn america around. Thanks for having me on tonight. My argument is that were on the verge of a new american century. So much of what is happening around the world is of such tremendous benefit, but there are things we have to do to get that right. Its within our reach, but we have to change our laws and our tax code and a number of regulations that we have so that we can encourage innovation, investment and expanding access to markets. If we do that, americas uniquely positioned in the 21th century. If we fail, well pay a huge opportunity cost price. Thats the thing. Its a policy issue and i want to talk about your specifics. You have a great list of specifics. But its also a psychological issue. Thats the thing. Weve been engulfed in this pessimism. Instead of can do, its all about we cant do. Later in the program, i have John Mclaughlin coming on who will tell us among other things that running on obamacare is not enough for the republican party. There has to be a growth message, there has to be a middle class jobs message, there has to be a take oem pay message. Is that what youre anxiogel angling for . Yes, if they are negative, i would say we do have serious problems, but which country would you trade places with. There are probably elements of other countries that we would want to have, but what country would you swap for ours. And i think the answer of course is there isnt one. So we still have many of the things in place that we need to succeed. We do, however, have a tax code for example that makes america increasingly expensive to invest in. We do have regulations that are standing in the way of the sorts of innovation that we need. And thats why ive argued not just for as in a al regulatory budget which basically says every year you have to set a budgetary amount of how much regulations should be allowed to cost the economy. And then every year youd have to estimate how much the actual proposed regulations are costing. And if its over that budgeted amount, you have to reduce regulation to get underneath it. Beyond that i would say that our tax code particularly on the corporate side needs to be made competitive again. Youve heard that from many people. But to graphically explain to people the decisions that companies are going through as they decide whether to invest or not in americas future. Right now we have 4 trillion of cash that companies are sitting on and wont invest because of the tax code and also because the uncertainty created by the national debt. Let me go right there. This is an important point. We interviewed ways and means chairman david camp who gave it his best college try, but i think we can do better on that. In your Corporate Tax reform plan, you want immediate experiencing of anything for do with investment. I think that hits the nail on the head. For some reason, youre the only senator ive heard that really talks about that. I mean we want to lower the rate. Why not do that . Expense everything immediately and then you can have some sales tax that will be more efficient at collecting revenues. To me immediate experiencing and investment would absolutely create a boom, i mean a boom, a jobs boom. Businesses havent spent in this whole recovery. This would create it. First we have to explain to people as i tried to do, the way jobs not just jobs by the way. Jobs is not enough. It has to be higher paying jobs. About 43 pay 16 or less. We need jobs that pay 30, 40, 50 an hour. How are those jobs created . When a company or individual that has access to money invests to start a new business sore to gr or to grow an existing one. We want a tax code that says the more you invest in to the the economy, the more you invest back in your business, the less you have to pay uncle sam. Im not sure why that message is not getting through. President obama has a version of Corporate Tax reform, but at the goes to Great Lengths to penalize person companies. A couple of hundred billion dollars of higher taxes. He wants to penalize companies that are operating overseas. You have a free trade component in here which i think is exactly right. Youve got a great Corporate Tax component. The president has the whole story wrong, does he not . And will you fight it up on your behind legs and just fight this thing . Well, i think part of fighting it is to offer a clear alternative. You pointed to overseas profits. We do have American Companies that are manufacturing or doing business abroad. And heres what we want them to two. We want them to bringare makingo the United States. But the way the tax code is now, they have to pay the taxes there and then if they bring it here they have to pay taxes again so theyre not bringing the money back. We have 4 of the worlds population. If we want to grow our economy, we have to improve our ability to sell products and services to all the other 96 of the people in the world. And by lowering trade barriers, if we dont do that were putting ourselves at a competitive disadvantage. And speaking of high paying jobs, the Keystone Pipeline is a high paying job. The entire Energy Revolution of horizontal drilling and fracking is a high paying job. Now, weve got this crisis in europe, Vladimir Putin has delusions of grandeur. If we can create liquid natural gas terminals and depots and what not and export all of the gas shale, we ccan knock putin down. We have six permits. Thats it. Nothing can happen until 2016 or 2017. We have to why arent we preparing for this . Why arent we going whole hog and sending the markets and putin a message right now about the importance of the Energy Revolution and how it can help europe and how it can stifle dictators like putin . Well, youve just outlined the geopolitical benefits of american energy, but there is also strong economic benefits. Here is the fundamental problem we face. You have to get it from the source to the export point and that calls for a National Network of interstate pipelines that allow us like keystone to move oil or natural gas. But the permitting is so oppressive. Look at in florida, theyre trying to get a natural gas pipeline into the state and they have to go through at least six different federal agencies. So thats one of the things we talk about in the speech is getting rid of those regulations. Streamlining that process. Because the exploration is fantastic, but you also have to make sure you can transport the energy and in an effective and Cost Effective way. Infrastructure, president never says that, infrastructure should include pipeline infrastructure, it should include liquid natural gas i instru instruct. Youre exactly right. Im here to encourage you. Immigration reform if done correctly is progrowth. It takes leadership. We want brainiacs to come to the college, we want the College Students to stay and help us out. We want a visa system that allows people to come back and forth. Heck, our fertility straight going down to 2 . Well need workers. Senator rubio, dont give up on immigration reform. People are whacking you. You are a leader on this. Immigration reform is pro growth. I agree with that concept and i think the fundamental obstruction that we face is not on the progrowth side of immigration reform. I think thats a majority position in america that we have to have a Legal Immigration system that allows us to keep the best and brightest from our universities, that allows us to attraction investors, that allows us for bring in a work for the when necessary. Were this a global competition not just for business, but for tale talent. I think the impediment has to deal with the illegal part. We need to improve enforcement and the other is we have to address the fact that we have 12 Million People in the yunld living here illegally and no one is seriously proposing deport 12 Million People. So what the debate is about a what do you do to address the people that are here. You have to do it in a way that is responsible but also a way that is realistic. Thats the tough part. Try to arrive at a consensus on that. Im arguing lets do the other things that we agree on. If we can move on the other things like we outlined, progrowth aspects, its not going to make it easy, but it will make it easier to deal with that other part. I know its a tough issue politically and im not a political strategist, but i am a marco rubio fan. You know, sir, there is no limit to what america can do and achieve. People in this country have to be reminded of that and people around the world have to be reminded of that. America has no limits. I want to he said on that. Your comment. I agree. I think our future can be brighter than our past. I think that the 21st centurys tailormade for what the country is good at. But we have to make a few changes if we want to fully utilize that. Senator, thanks for helping my pal jimmy camp and thanks for all the good work you do. Thank you. Now, were continuing to watch events unfold in the ukraine. Its time to look closer at natural gas shale exports, how they could really damage putins fantasy of a new russian empire as i was discussing with senator rubio. Well talk to a policy expert and were also going to talk to a Top Energy Company ceo about that whole story. And heres a shocker. A major union comes out and says that obamacare kills jobs, increases income inequality but heck, isnt this the very law the unions fought for . Maybe they will all get wise and turn against it. Well debate that in a while. For now, free market capitalism is the best path to prosperity. America has no limits if we unleash our entrepreneurship and our creativity given by god. Im kudlow. Well be right back. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. 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Ukraine relies on russia for 70 of its natural gas supply. Six european nations rely on russia for 100 of their gas. And seven others get at least half from russia. But, but, but capitalizing on americas shale gas boom and speeding up Energy Exports could be a powerful solution to stop russias empire building and its stranglehold on europe. So lets talk about this. Michael smith, freeport lng. Energy expert dan yergin. Author of the quest. Good evening, gentlemen. Dan, the problem i have with this story, i think a lot of people, and i know mr. Smith will be on the right side of this, want to do want to help, want america to put this shale boom to use. But it takes so darn long. Let me ask you two things. Is there anything we can do now that might shake up putins whatever it is, master plan, takeover crimea, rebuild the russian empire . How do you see it strategically . First let me say its great to be on tonight and its thes been great to be on all these years with you so im glad that back here in the month ever march with you. Thank you. People have a notion that we can turn on the faucet and the lng will flow. First contracting contract that i believe will go to europe wont be until september 2018. But what we do have is the reality of this unconventional revolution demonstrates that it has Foreign Policy implications, we wouldnt see for instance iran at the negotiating table were it not for it. But i think the impact of u. S. Gas is already being felt in the market because lng from other places that was going to go to the United States is going to go to europe and that in itself has brought some diversity to it. Where is that coming from, dan, this lng youre talking about . Its coming from the middle east, its coming from global even west africa. But we were going to five years ago we were going to be importing a lot of lng. But it takes time and billions of dollars. So its not like oil we can just put it on a tanker and ship it. Michael smith, first of all, welcome to the show. Let me ask you this as an expert. As a guy who is doing this stuff. Is there a price level . Lets say the American Government miraculously okayed, i dont know, 35 or 50 lng terminals. Lets just assume that for a minute. To really go after putin and this gas that hes got. Would that affect futures prices and what kind of low prices do you need that would say to putin youre in trouble, youre not getting the rate of return you need in the rest of your economy stings. Your stock markets collapsing. Your currency is collapsing. We can make Natural Gas Prices collapse. Is there a way to do that . I dont think we need the price support or anything from the futures to make it work. Right now lng exports makes sense. Others are planning theirs based on current prices. I do think if the government did approve all the plants that could be built right now, the futures market would rally. They did when my plant got approved. But that would be temporary as daniel said, it takes a long time for the plants to come online. I would be remiss to ever correct dap cell about anything in energy. But the first lng from the United States will come in late 2016. Ours will come late 2017 and 18. Whether thats enough to help the russians michael europeans yes. Michael, obviously i have Great Respect for your determination through a lot of tough times to move ahead to build it. But i think the first contract will start in 2016, but i think the first contract to europe is not until 2 20 018. So thats where the gap is. First contract is with shineer. Where they take it is anybodys guess. If we made it clear, michael, i want to ask both of you, im a free market guy, i believe in pricing. If we make it clear, if the president , obama, who is talking about economic sanctions and so forth, if he makes it clear that whichever agency, interior department, e pechpa, i dont k who has to okay these terminals. But if we make it clear that we will produce a lot of liquid natural gas for export in the next five years, lets put it at five years, doesnt that have some impact on the forward market and then that comes back by arbitrage closer to the cash market . Wouldnt that bring prices down . I think it would definitely have an effect. I think it would have a long range effect on planning in russia. Not just in europe. But in what they will do in china and the entire asia. We are moving way too slow in approving lng permits in the United States. Thats the key. Five permits have been approved. We have a very odd process where first as michael knows its very arduous. First you go to the department of energy and you also then have to go to the federal to the ferc. Takes a long time. And its a kind of mixed upset as to what needs to be approved and what doesnt. But one thing to keep in mind people havent focused on at all, country that has a lot of shale gas potential happens to be the country called ukraine. What about israel . Israel has a lot of shale gas. A lot of gas underwater. Israel will become an energy center. Can we do something with that . When i saw the eu energy commissioner, he talked about gas coming from the eastern med as they call it coming by 2022. And think one of the consequences following the 2006 and 2009 shutdown of gas from russia to ukraine, i think this event will give a big push not only to lng and perhaps rethinking of how we handle it, but to projects like that Eastern Mediterranean from ppro. Michael, i will give you the last word. Im not an obama supporter on economic issues, but this is a war time issue. Putin is the enemy. Hes the devil. Not president obama. President obama has made a lot of statements about economic sanctions and individual sanctions that i happen to agree with. Now, sir, isnt it important for him to come out in his next statement and give a boost to the lng industry, to exporting natural gas . If we do that remember george bush did this in different circumstances when oil was 150 a barrel back in whatever it was, spring and summer of 2008. And bush said we were going to lift a lot of drilling bans. Immediately the market adjusted. That was a complicated period. But im just saying right now, if obama came out and really gave a push and said, yep, im going to give a green light, well streamline the process, wouldnt that help, wouldnt that affect the pricing, wouldnt that send a message to you putin . It would absolutely send the message and were all supportive of it. One thing, larry, that you putin does that like is shale gas. Ill bet. Ill bet. Thats why we have to produce more of it. That will knock his empire down. He is living in the 19th century. All right. Im out of here. Michael, dan, thank you very much. Now, look who made the big speech to the crowd today south by southwest tech expo a big story. Not Edward Snowden and courtney ray gap will tell you what he had to say. He actually made this big speech and got a lot of applause for it. Absolutely incredible. [ male announcer ] this man has an Accomplished Research and Analytical Group at his disposal. But even more impressive is how he puts it to work for his clients. Morning. Morning. Thanks for meeting so early. Oh, its not a big deal at all. Come on in. [ male announcer ] its how edward jones makes sense of investing. Makes sense of investing. She loves a lot of its what you love about her. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than 4 hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Welcome back to the kudlow report. Edward snowden got a huge ovation at the south by southwest interactive festival today in austin, tooegs. The nsa leaker who is a fugitive in russia spoke to the crowd Via Teleconference on the background of the constitution. The nsa is a global mass surveillance in all of these countries, not just the u. S. And its important to remember that this is a global issue. Theyre setting fire to the future of the internet. And the people who are in this room now, you guys are all the firefighters. And we need you to help us fix this. Snowden says Large Companies like google and facebook can collect information on customers for business purposes, but thinks it shouldnt be kept forever. Snowden went on to say government surveillance is worse because, quote, they can jail you. Someone did ask snowden if he regrets what he did. He said no. That he would do it again because he took an oath to uphold the constitution. Larry, i know you have some thoughts on this. I do. This nsa business may well have to be reformed. Im in the im not an expert on that. But this is not the way to do it. Snowden is giving up information that could endanger lives and entire systems. And this is a time where were virtually at war with russia where hes hanging out. And lord knows what hes telling them. And the techies were all cheering for him. One of the biggest talkers of the day today which not what you would expect. They should be ashamed of themselves. There has to be responsibility. Boy, i dont get that. Courtney reagan, thanks very much. Weve been telling that you obamacare will kill jobs and hurt the economy. Been saying that for years. But now a major upgroup is saying the very same thing as the Labor Movement finally figured this out. Well talk about that and some other big obamacare news just ahead on the kudlow report. Captain obvious im in a hotel. And a hotel is the Perfect Place to talk to you about hotels. Allyoucaneat is a hotel policy that allows you to eat all that you can. The hotel gym is short for gymnasium. The hotel pool is usually filled with water. And the best dot com for booking hotels, is hotels. Com. Its on the internet, but you probably knew that. Or maybe not, i dont really know you. Bellman welcome back, captain obvious. Captain obvious yes i am. All those words are spelled correctly. So ally bank has a that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. Welcome back to the kudlow report. Broadcasting live here from cnbc will headquarters. Now, unions generally speaking have been some of president obamas most stalwart supporters on obamacare. But some are defecting. A labor Union Representing some 300,000 Hospitality Industry workers issued a new report accusing obamacare of cutting back on hours worked, decreasing wages, and transferring wealth to Insurance Companies. Theyre complaining obamacare will in fact create more income inequality. So who told them to back it in the first place . By the way, the Congressional Budget Office came up with the same estimates on jobs and hours worked. So lets talk. Heres our old friend David Goodfriend back with us. Former Clinton White house official. Dying to hear how hell defend this. Mclaughlin and paul howard. Paul, just to get some technical stuff out here on the table, the union is right basically. You i mean in terms of moving wealth to Insurance Companies, cutting back on hours worked and job equivalent, wages will decrease. Theyre right. Didnt they know they were right . Maybe they pad to pahad to p law to find out whats in it. But youre right, the cbo report made the exact point. Workers will reduce the hours theyre working because they will get hit by tax penalties. So its aprn income trap. I want to hear david react. David goodfriend, these guys have woken up to the truth. Other labor unions have been complaining that they are going to lose their tax advantages. Basically, david, with the exception of you i think the entire country, the entire country is opposed to obamacare which is why i want a three year moratorium. Do you have any problem with that . Before i answer that question, i want to thank you for having me on the show both tonight and in the past. Well miss you. Sorry to hear about your retirement. Thank you. Now let me Say Something obnoxious. If you look at how labor unions in general have reacted to obamacare, they have always said that if were going to set up these exchanges to allow people to choose in a variety of different plans, the unions want their plans to be included in the exchanges. Why . Because they run them as nonprofits, because under the taft hartley act, theyre done as a service to union members. But if theyre going to incur 134 some of the costs that a regular insurance will incur, they want some of the benefits and they feel this is really the key to helping lower income people like wait a second. I dont disagree with that. Others may. I dont disagree with that. I dont either. I think its a valid criticism. The the problem is theyre not getting a lot of the benefits other insurers are getting. And so theyre angry at that. This is the Old Washington game of crony capitalism. Who is going to get which favors for how Many Campaign donations. And that bothers me, John Mclaughlin. I think davids got the story right. Its just the way its being done that bothers the hell out of me. First of all, the voters tomorrow in a special election in florida 13 can acceptedsend e by voting for the republican. That could be an acid test. This union has a lot of Hotel Workers in that district. A lot of votes have already been cast. But they have turned the Insurance Companies into public utilities. Basically they have taken away consumer choice, they have thrown out all these mandates. And theyre passing the costs along to a working middle class who saw this coming. We saw it in our yg network polls we had last year. Costs, people not getting choice. They saw it coming all year long. And now when you ask about the economy, theyre telling you you need Economic Growth as you heard senator rubio talking about. They need Economic Growth and they basically see the obama care program as a big wet blanket on the economy. Paul howard, i want you to comment on what david said before because the unions may not be getting all the benefits insurers are getting. Is that true . I think they want to have their cake and eat it, too. They already have tax subsidies like every other company that offers Health Insurance as a benefit. If they want to get subsidies from obamacare, they can start their independent Insurance Companies and compete on the exchange. A local union in new york has done just that. Dont they have to pay this cadillac tax . Unions do. I know thats part of the taft hartley might exempt them, but everybody has to pay the cadillac tax above a certain value. Theyre also about paying the reinsurance tax. But then everybody else will have to pay more. Thats the point. All im saying is unions are getting screwed. Thats all. Everybody is getting screwed. This is a terrible idea. David, look, i want a flee year timeout. Obama has already given it individual mandate, at least renewal of of the cancellations, hes already put a three year timeout on that. I guarantee you hell put a third year on the employer based stuff. I dont want any Insurance Company bailouts. Thats why im saying lets go back to the drawing board, lets do it lawfulfully and constitutionally by Getting Congress back involved, put a three year moratorium and stop this before it destroys the country. Okay, larry, henry waxman, top democrat on the energy and Commerce Committee who was chairman of that committee when they passed the aca came forward and said ive never seen a law as big as this that wasnt subsequently adjusted by acts of congress afterwards. And his point is lets fix it. And the problem is that youve got this contingency in the house of republicans who vote 30 times in a row to repeal it but wont sit down at the table to actually fix it. It wont go away. Hang on a second. Let me clarify. In some sense, i agree with mr. Waxman. I agree. Thats why im calling for a timeout. For a amoratorium. It will let the house get revolved and due process to occur. The president complaiant keep huge changes willynilly under you no constitutional authority. We have liberal left lawyers like Jonathan Turley saying youll rue the day. He keeps doing it and in spite of what david was talking about, hes not offered the republicans anything about changing the law except what he wants to change. Because he wont do free market reforms. He wont give this law, this report says it will hurt working middle class people who make about 20,000, 40,000, 50,000 a year. They will end up paying more and having less in their paycheck because of it. And they wind up in medicaid. Which is a poor mans medicare which has no doctors by the way, theyre in the going n note with the part d drug thing. Theyre furious at that. Vulnerable Democratic Senators are saying there should be more chance. Democrats are running away from this, at least the ones that are vulnerable. Were missing a pretty credible fax. 4 Million People have signed up. Probably 8 million total at some point. The public does support things like in kentucky their own plan. They dont know it as obamacare, they know it as kentucky connect and they love it. They like it when they have a kentucky name on it. And benefits things like staying on your parents plan up youre 26, all these things poll incredibly well. The Marketing Campaign against im all for those two things. People actually like what it produces. Look, republicans have to convince people that they will help sick people. Okay . Totally agree with you on that. And the 26yearold thing, im fine with that. I dont care. The rest of it, you can throw it out the window. Map dates, tax penalties and all that stuff. John, ill finish with you. Your polling and reporting that if the gop just runs on obamacare, whether its full repeal or what, thats not enough to win the senate or the congress in 2014. Spe tell me why. Because so many voters care about the economy, as well. They see a totally flat economy. And this is a symptom of it and its hurt williing the economy e middle class. Republicans like eric cantor said they should have their open plan which will take some of those issues the democrats care about off the table but give you control of your health care again and allow the economy to recover and grow. Is rubio right the he has a six or eight point progrowth plan. With everyone obsessing over obamacare, which should be obsessed over, but im not hearings old gop growth message. Just starting to hear it from a few places. Youre right, they have to listen to you. Ill be around. Ill be very busy. David, youre great. Hope to see you here in new york soon. Powe paul howard, thank you as always. 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Sign up for internet and voice and find out how to get four weeks of internet for free. Comcast business. Built for business. voseeker of the sublime. Ro. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Im going to step out on a limb here. Hold on, weve been waiting for this. I think were at the bottom. I really do. All right. That was the late mark haines making a good call. And my great pal dougie kass on this show called it a once this a generation brottom. Now, heres a really interesting part of this story. While this bull market has been among the strongest in history, it is completely delinked from an economic recovery that is one of the most tepid in history. What happened here was a v shaped profits recovery, remember, profits the mothers milk of stocks, but a rather flat u shaped economic rebound. For example, some numbers. The 18 quarter recovery so far as averaged only 2. 3 at an annual rate. Historically over 11 recessions since world war ii, afrpg recov average recovery rate is 4. 0 . Under Ronald Reagan, 5. 0 . Jobs story, record low prt pace rate. Jobs have grown only 5. 2 annually compared to a 10. 4 post war average and 15 pace during the reagan years. The point is this has been a very poor recovery. Im going to make this argument. The backbone of the bull market has been 109 rise in the broadest gdp measure of profits. And well get an update in the fourth quarter. Second factor besides profits, yep, low Interest Rates from the fed. There is a third key point to be made here. Weak labor markets have enabled businesses to hold down wage costs. And thats about 70 of total business costs. My friend jason treneff and others have pointed this out. So my advice to investors, keep profits under a microscope. And while youre at it, keep a sharp eye on wages and, yes, fed Interest Rate moves, as well. I wish jobs and the economy were vastly stronger, okay . Vastly stronger. Growth is great for the country and the sfok market, too. But weve had too many regulatory burdens, including obama care, too many tax burdens, doddfrank has stopped lending. This stops the kind of growth the country needs. The one thing we havent tried is across the board tax cuts like jfk and Ronald Reagan or thorough Corporate Tax reform as they tried and as senator rubio said. So anyway, all ill say is stocks are doing one thing. The economy is doing another. Profits are in the middle. And wages are doing that. Final point, i think the market is optimistic. In fact i think the rise in stocks is telling us both politics and Economic Policy and the economy may get better over the years ahead. You know im an optimist. That is my preferred interpretation of the stock market rise. Now, well stay with this story. Stocks and the economy. Why it did one do well and the other not . Well be right back with two top money experts who will try and explain it and ill get their take on my theory. Huh. Fifteen minutes could save you fifteen percent or more on car insurance. Yep, Everybody Knows that. Well, did you know the ancient pyramids were actually a mistake . Uhoh. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. More on stocks. As i argued, profits are the driving force behind the five year bull market. Behind profit are low wages and low Interest Rates. We have larry glazer and jeff kleintop. What do you think, jeff . People say its all the fed. I dont agree with that either. I think its all profits. And i think jason treneff, perhaps yourself and others, low wages have a lot to do with the rally. Thats a huge part of that, but stronger isnt necessarily better when it comes to gdp and the s p 500. Its around 3 is the sweet spot when weve seen faster rates of gdp growth, we actually sea weaker returns. We have about 16 annualized return. And there are reasons. Most of profits are tied to production of goods where services make up a whole lot of gdp. International sales are a whole lot of s p 500 profits. And finally take a look at oil. Oil has gone from 35 to 100 over the last five years. Thats actually a net plus for s p 500 profits. Wasnt a net plus for the economy, though. All right. It may be just a return to normalcy. Im not sure. But larry, i mean, its not the ukraine. It wasnt the fiscal cliff. It wasnt greece. At the end of the day, if you go back through the cycle, it was profits. And if youre up 150 in round numbers on the s p and profits can account for 109 , that tells you something. And i think a lot of people lose track of that basic fundamental profit issue. Well, there clearly is a direct connection and an easy correlation. If you look at the chart of stock growth, it really is a great relationship and its very comforting when you look at that. What is not so comforting is the fact that even though weve had one of the weakest recoveries in modern history, we continue to adopt policies that will keep us in the stunted growth. And look at the health care law. Again, keeps a lid on labor, keep as lid on wages, keeps a lid on hiring and continues to stunt that. Likewise lack of tax reform keeps capital overseas that should come back here. That. Likewise lack of tax reform keeps capital overseas that should come back here. Stunt tha. Likewise lack of tax reform keeps capital overseas that should come back here. This they say the fed will solve all the problems and it will not. And when you can say profit is 109 of the 150 , it is not just the fed. If we have a strong dollar to hold down inflation, and we have the kind of tax incentives larry is talking about, that can help the economy and the stock market. Im not happy with this delinkage. Im not happy at puall but thos are facts and people should be focusing on profits and not ukraine. Thats right. And its interesting this year, the rally back from those lows one month ago in early february, i think it was tied to some of the things youre talking about. A change in policy in washington. You know, that was right around the time of the debt ceiling. And the news that came out the republicans were not going to tie anything to that debt ceiling, not codo anything in a might hurt poll chances. I think they might turn obamas last two years in to more of a lame duck. I regard it as very optimistic for a whole bunch of reasons. Thanks for helping us. Larry glazer, jeff kleintop. Terrific stuff. Thats it for this evenings show. Thanks for watching. Im larry kudlow. 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Its just one reason over 75 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. The following is a cnbc original. Come along on a ride with us. Were about to take you to a place unlike any other. Lets go. All right. Where marijuana is legal, and the scent of money is in the air. First time ive smoked a joint in a long time. Go ahead and take it easy. It hits really smooth. And i no longer have to feel like a criminal. Thats right. Im not doing anything wrong. Kevin and rachel are pot tourists, oh, so happy to be a mile high. Welcome to colorado. In colorado today, the start of a brandnew industry. This is by far one of the biggest stories happening in the world right now. Once, prospectors came here