Banks passed the feds stress test and many of them have way more capital than required for basl and 21 capital rules so were looking at excess cap it will and will give it back to shareholders. I dont know if you could hear, more dividend increases in light of the stress test. When you consider the role the financial stocks played in the downswing, they have been leaders the last few years here. Go cothat be higher next week if we get decent dividend increases . No doubt. Definitely could see them lead high. In general i think the market will continue to drift on up. Very good. Were heading towards close, an historic week to take note of, and i look back to a comment made by another floor figure peter costa who said this is a market high thats been focused on so much by the media and not so much by the individual investor. Well wait and see whether that happens next week with more headlines that are coming our way. The dow, a record closing high, above 14,000, almost 14,400. What does it mean . Lets talk about it in the second hour closing bell. Have a good weekend. And the rally rolls on on wall street. The Dow Jones Industrial average closing at a record high for the fourth session in a row. Hi, everybody. Happy friday to you and welcome to the closing bell. Im embroemo on the floor of the new york stock exchange. Take a look how were settling out this friday afternoon. Once again uncharted territory for the dow industrials. Hitting an alltime high of 14,393. Up 80 points earlier. Still closing at high as we had a big imbalance to the buy side. Half an hour to the close. Nasdaq well off its alltime high and check out s p 500, a few points away from an alltime high on standard poors. Probably going to hit that in the next couple of sessions next week, up to 1551. What a week the dow and s p 500 up every day this week. The dow continuing to hit alltime highs. Joining me right now is stephanie lines, cnbc contributor from the street and brian welling, hank smith from haverford investments and our very own rick santelli. Very good to see everybody. Thanks for joining us. Hank, let me kick this off with you. I know youve been a fan of the banks in the past. Are you expecting dividend increases from the banks, and do you think this adds to the euphoria next week . Absolutely. Look, we think, first of all, a couple years out youll get back to normalized earnings and that also includes normalized dividend kind of pre08 dividend rates. It wont happen overnight, but it will happen over the next couple of years so were looking for aggressive dividend action to occur this year and next year. Stephanie link, you have to believe that there are some that missed this rally and are going to chase it. Were still seeing that chasing going on into this into record territory. What do you think happens now . Well, i think what will happen is as the Economic Data continues to improve, and i believe over the last couple of weeks thats what weve really been focusing on and thats whats driving our markets higher. Better housing and better ism, certainly jobs have improved, but i think as that data continues to improve, people are going to focus more on the stocks and the industries that have lagged. And, so, maybe we can creep higher but i think theres opportunity in some of these cyclicals, like technology, like industrials and certainly like materials. I think thats probably the most disliked sector at this point, so i think theres definitely opportunities where you can buy, buy carefully, but thats where you want to focus on. You have to wonder if the Federal Reserve is going to start considering pulling back, rick santelli, given the numbers that we saw today, but it just depends on if in fact these jobless numbers continue to show strength and improvement in the next couple of months. I think Ben Bernankes term expires in early 2014, and my own personal opinion, these programs wont change until hes gone and maybe not until after hes gone, i dont know. 21 basis points what tenyear yields run on the week. Of course, we all talk about how that 85 billion of qe is positive for stocks, but theres still a pulse on some level of Interest Rates, and i know that some very large bond managers were tweeting today, probably a good time to start considering buying treasuries. I cant disagree with that. I think that it is just unrealistic to think that were going to get some big tipping effect with the feds Purchase Program at this level and at this point in time so, you know, seeing both markets move up together, rates and stocks, was very reminiscent for me. Thats the way its supposed to work, but it wont be working this way for very much longer. Brian, what do you think . Where are you on this market ral . Well, i think we have a lot of room to go here over the course of the year. Theres a lot of retail money still on the sidelines. I think they have just begun to tip their toe in, and i agree with rick that bernanke is going to continue with his foot on the gas for the rest of this year and into next year to support the equity markets and should keep rates relatively well contained as well, though i dont see a lot of big gains on the bond side, but no big losses either. What about stocks . Do you think its too late to get into this market in terms of snoks have we missed much of the ral . Well, i mean, youve missed a lot of the rally from, you know, the low several years ago, but i think theres plenty left here to go. I think youre doing yourself a much bigger disservice being out of the market than in, so be appropriately allocated, you know, not significantly overweight here, but from what im seeing theres no great rotation out of bonds, into equities. Theres still a lot of cash on the sideline and for the most part a lot of are still underinvested in the equity market. And maria, valuations are not really stretched. If you think about earnings, they just beat pretty handily in the last quarter. People were looking for 3 . Thats when we had a lot of issues in the Fourth Quarter clearly with the fiscal cliff and what not. I think as environment and the Economic Data continues to improve and jobs get better, that bodes well for corporate profits. And what dont forget yeah. I said dont forget about housing either. I think thats going to be a big catalyst for this market as we go into the rest of the year. Inventories are lowe and hiring in the housing sector and the fundamentals there are starting to turn which could drive the economy over. What are your expected in terms of earnings . Do you think its been a good quarter in terms of corporate earnings . What about you, hank . Weve seen trough earnings in the First Quarter and i think well see Earnings Growth rates start to pick back up for the market in general and be much stronger in the second half of the year, and i think the market is kind of telling you that, forecasting that, and, look, the reality is were up well over 100 from the market lows, but its been fundamentally driven so let forget about the federal for a moment but fundamentals are good, confirmed by dividend growth, and well continue to see that. And anier to thoughts, stephanie, on the earnings story . Where do you think the strength and weakness will be in the First Quarter . I would say after the Companies Reported firstquarter earnings they were very, very conservative in terms of their guidance, right . There still is uncertainty. Lets face. It not all is perfect in the world. We do have sequestration and the debt ceiling and the potential for qe to potentially end, but i think expectations are fairly low for the First Quarter. Again, i think the second half of the year is very could be very powerful and thats not just housing. Auto sales remain strong and housing and manufacturing really making a comeback. You get those together and the earnings picture gets better and valuation is not affected. I like what youre talking about on dividends. I think its very interesting. Ilike to pose a question to you and the entire panel. If the economic fundamentals outside the fed are so great, then why arent these businesses finding great things to do with the money versus stockpiling it and then having all of the advocates try to get it pushed back into dividends and passed back to the public . Well, we know the answer because they have been saying this. Theres too much uncertainty and the regulatory environment, and until we really, the fundamentals arent that great then . And they are sitting on cash. Well, m a has tripled from last year so thats a good sign and you have seen dividends and buybacks so at least theyre doing shareholder friendly things but the m a story. Wasnt that big time right before the crisis in 05 and 06 . The m a story is an output of the cash. Corporates are sitting on 3. 6 trillion of cash. They are going to do three things with it, pay dividends, buy back stock, and they are going to do deals. What did the fed really want the money to do though . Is that what they did all this exercise for, to pass it along that way, or was it supposed to build into the economy . It seems to me that something just isnt reconciling here with that excess cash. I think as long as Companies Look for growth and find growth and they can continue to do a lot of various Different Things with their cash and they are not overpaying for this growth, i think thats actually positive for the long term. Sitting on all the crash gives them wiggle room. Companies have been sitting on the cash for a while, talking about it and when we talk about it and talking to corporates about it, they say the same thing, too much uncertainty about the equity market, end market demand. Cash sitting on a Balance Sheet is a problem. They will have to put it to work. Hank, you want to fwhai on that, brian . All things being equal i think you would rather see companies are large cash balances than be worried because Balance Sheets are weak or Balance Sheets dont have that much cash. Look, its a positive thing that ball sheets as stong as they are with low levels of debt and high piles of cash. Theres plenty more corporations can do. Thats a positive thing. Corporations have a lot of arab. Individuals have a lot of cash on the sidelines and not vested. They are still ahead of the up tent. Those wounds are a little too frach to get and take some of the risks that would be advantageous in this type of economy. Four record in four days, tand josh lipton with the leaders and laggards. Reporter leaders are ibm, boeing and mcdonalds. February sales at established restaurants dropped 1. 5 , slightly beggar than expected. Laggards included names like caterpillar and exxon. Leaders includeded best buy in the technicals, up 70 , genworth adviser and trip adviser and laggards, jc penney where the judge ordered the two of the companies to mouth finally, in the nasdaq, mike ron and sears which is now up to 20 pints this week and upyear, debut down 30 . All right, josh, thank you very much. Larry fink told me yesterday on this program that wall street is in for a pullback. I would not be tiesed to see a 5 reduction and were seeing a clowe town in flor. And if right, should you buy the dip that he sees headed our way . Then, it could happen next week. Well talk about what will take it there neck. 401 plans may be all the way back and then some our watching snebs. Stirs in Business World wide. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. To deposit checks from anywhere. [ wind howling ] easier than actually going to the bank. Mobile check deposit. Easier banking. Standard at citibank. Makes it easy for anne to manage her finances when shes on the go. Even when shes not going anywhere. Citibank for ipad. Easier banking. Standard at citibank. Well come back. The battle over best buy is going finish and the poils seem to be a stock on the move. Seema mode we this weeks nasdaq winners and losers. Reporter thats right. Renewed optimism on the street that the electronicsmaker can implement or turn around as well as bullish commentary from a series of analysts helped best buy end the week with a nice gain, 16 . Other big winners on the nasdaq, take a look at vertex pharmaceuticals. Josh lipton mentioning that, stocks higher thanks to drug data. Sears moving higher, traders telling shares were moved to the upside and take a look at San Francisco oldschool tech, hitting a 52 trade. Ebay shares are lower after a bearish note was put out citing weak growth tunds and following the selloff with find in tech gentlemen and stores and the company blaming a delay in income tax refund. Ale was not the biggest mover by any means and did end the week up. Its first week of gains after three weeks of losses. Thanks so much. As the marks keep driving higher and two higher highs we asked is this a real bull market, and does it continue higher . John brown of Europe Pacific capital says its not and get out now because the market has moved too far too fast but rob lutz totally disagrees and says be ready for a big upside move from here. Who is right . Joining me now both of them to hash it out. Thanks for joining us. John, let me start with you. You do not have faith in this market ral . What turns it own . Whether weve had two items of news, the stress test which the major stress was missing, falling Treasury Bonds and employment figures which on the surface look better than expected, but i think the jury is out and one of the big tests, okay, is what the fed doing. The fed really sees a picture has still got the foot flat on the floor and the accelerator, sees that online job postings are down and there are four applicants for every single job posted online. The fed sees a Small BusinessConfidence Index has fallen. It sees that participation rates in the labor market are down to 63. 5 , the lowest for 20 years, and it also sees that 300,000 people have dropped off the roster each month, so with the outlook towards a sequester, towards higher taxes, towards more regulation, i think the fed sees its got to keep its foot on the floor, and, therefore, the jury is out for us investors. So, rob and they should be very cautious having had a very fast rise. Rob, why are you such a believer . I dont think so. To take the bearish position today i think you have to be in denial of the facts, and i think the facts today are that we are moving forward on this economy. Weve had three or four years of extraordinary stimulus on the economy. I liken it to putting heroin in somebody. This economy is getting better. You saw job growth and real good durable goods orders coming from the private sector so i think its very possible two or three quarters from now well see a 3 or 4 gdp quarter. Nobody is expecting that today. Now, i still think there is some challenges, but, you know, old adage a market climbs a wall of worry is really right there today, and another really important factor on here is deferred capital spending. Had three or four years of ceos not investing in this economy. I think thats changing, and i think thats the thing that moves the economy forward, and i think thats the thing that gets you a really big gdp quarter a couple quarters down the road. Rob, thats very eloquent, but you make an assumption i think that the inflation rate is around 2 to give the growth rates youve said, but everyone in the country knows that inflation is way above 2 which would actually put the American Economy in recession. Weve been in recession 3 to 4 . Its like people the high on the stock market, dont discount for inflation. The stock market would have to go up another 10 to equal its real highs. Make no mistake about it. We are going to get inflation, but its still probably six or nine months down the road, and i dont think thats important today. Whats important is rob, i where are people moving their money . They are moving their money today from very safe areas to much more aggressive, and equities. If you look at equities relative to bonds, they are the cheapest they have been in 50 years. Can you not stop this bull market. This bull market is going to go up 10 more before you have a substantial reaction. Rob, the question the real question for an investor is should they be moving the money, as you say, or should they be staying more risk averse in they are being forced by absolutely amazingly distorted Interest Rates to take risks. Thats incorrect. We are dealing with a manipulated economy, no doubt about it, but as a professional investor you have to look at the environment youre in. The environment youre in is a very positive one. Ill turn bearish when Interest Rates start to move up dramatically and whether when theres a lot of froth in the economy. There isnt today. Were seeing a very i agree with you rob i agree with you rob with one major exception and that is that i believe most of the listeners would say inflation is way above what the government says it is if they have children in school, if they eat food and have gasoline in their cars and that means were actually still in recession and people would be very unwise in taking hunk risks which they are not told b. For example,th dow jones record high, it would have to go up another 10 to equal its true record, and thats just taking a 2 inflation rate. What about if it was 6 inflation . John, when i first got in this business about 30 years identifying talked with john templeton, and he told me the reason you own stocks is because of inflation, so i agree that you need to be wary of inflation, but stocks are the solution to the inflation problem, and the time to own them is before everybody is in them and they are not in them today. A great admirer of john templeton, and i agree with you. What should you do then with your money . Whats the bottom line in terms of investors today . Would you be getting out of stock market right now, john . Well, i would now. I think weve had a marvelous run up at the beginning of this year,