All those stories and much more on the kudlow report beginning right now. Good evening, everyone. Welcome to the kudlow report. Im larry kudlow. Were live here at 7 00 p. M. In the east. Crimea may be going to russia. But a new cold war hasnt broken out just yet. Stocks also loved a Strong Manufacturing report today. Cnbcs Courtney Reagan has all the Market Action for us. It was a good day. It was a good day. U. S. Investors focusing on the positive Economic Data today, shrugging off the ongoing tension in ukraine for now at least, focusing on betterthanexpected industrial output and homebuilder sentiment. Green arrows across the board for the major indices on this st. Patricks day. The dow snapping a fiveday losing streak, surging 181 points. Yahoo shares gaining 4 today following news that alibabas chosen to list its ipo in the u. S. Alibabas ipo could raise 15 million, making it the biggest since facebook. Lets start with intercept pharmaceuticals. One of its drugs showed a higher occurrence with heartrelated patients than those given the placebo. Shares of amgen surged higher as that company says its new cholesterol drug met the primary goal in late stage trials, cutting the bad cholesterol levels among patients. Thanks, Courtney Reagan. Lets go to ukraine. Lets look at the russian and president obama. All this, the question is whether the president s sanctions on a handful of Vladimir Putins deputies are going to make much of a difference at all. Nbc newss Steve Handelsman joins us live from washington. Reporter good evening. Here in washington, white house officials insist that these new obama sanctions will bite and will impose a cost on russia. But only seven russians are sanctioned so far. Theyre cronies of vladimir putin, people the white house charges helped putin grabbed crimea. Its his seven associates personal asset and wealth tar targeted, frozen if theyre in u. S. Banks. The other four sanctioned are ukrainians, proputin crimean president yanukovych. This is the start of escalating u. S. Punishment. As an initial step, im authorizing sanctions on russian officia officials, individuals who provide Material Support to senior officials of the russian government. And if russia continues to interfere in ukraine, we stand ready to impose further sanctions. Reporter but republican senators john mccain and John Barrasso you were both in ukraine over the weekend slammed president obama for not directly sanctioning russia and its president. Vladimir putin must be encouraged by the absolute timidity the president said we will, quote, consider other options. The president should have said, were going to provide military assistance to ukraine and that will be in defensive weaponry. Reporter to try to prevent putin from grabbing more of ukraine, president obama who goes to europe next week on a previously planned trip, plans to put on more diplomatic pressure. Thanks very much, Steve Handelsman, we appreciate that. The question is, will president obamas sanctions have any teeth at all and will russia invade east ukraine to build a new empire . Here now, we bring in charles dalera, bill taylor and angela stint from georgetown university. Shes the author of the limits of partnership. Thanks to all of you. Angela, let me begin with you. I dont understand this. Ive been supporting obama the problem here is putin, not obama. Putins the problem. But i didnt understand todays sanctions. Theres nothing on the oligarchs who have the real money and the real assets to be seized. Nothing on banking sanctions, nothing that suggested we should stop importing Russian Energy. To me, theres no teeth just affecting a handful of putins top lieutenants, people that dont have any money in the first place. Can you explain to me what this is all about . Well, i think its intended, first of all, to deter russia from doing any more, possibly to deter russia from annexing crimea and making it part of the russian federation, although i think putin will probably do that in the end, although maybe not so quickly. And i think its also a realization that theres not very much that the u. S. Can do unilaterally if the europeans wouldnt go along with much tougher sanctions, we have limited leverage there. So its intended as a warning. And by the way, i think those other oligarchs you mentioned, they dont have much of an impact on these kinds of decisions that putin makes. Thats a very small group of people and those people dont have too many assets in the west. I dont know, charles, is that true . I dont want to get hung up on the oligarchs. Putin may not be close to the oligarchs but the oligarchs have a lot of assets in western banking, including the United States. They come to new york all the time. Their kids go to american schools. To slap visa sanctions on them would be something, be a lot of squealing. To slap banking sanctions, Wire Transfer sanctions on russian banks would be worth something. Maybe the president s going to ramp up to this, charles, but i thought today was very disappointing. Well, larry, he is moving very, very slowly with the sanctions. I was a bit surprised at the tepidness of the sanction initiation here. I do think that the plan is to escalate the sanction pressure. But at this point, i think there will have to be significant moves, not just for the oligarchs but to consider moves relative to the russian financial institutions. We have to remember that the european concern focuses merely on Russian Energy and understandably so. They depend heavily on Russian Energy, particularly gas and oil as well, for their manufacturing sector. But i do think that there is scope to accelerate the sanctions and still fall short of damaging the fundamental flow of oil and gas from russia to western europe. And there are some people, ambassador taylor, we had boyden gray on this show friday evening. He said imports on Russian Energy could be done, that the spring is coming, the inventories of oil and gas are higher than you think, we could help them out. Im amazed so far that president obama hasnt talked about repealing or changing the exhort act, the oil and gas export act which goes back to the 1930s, theres no sort of future, were going to be tough here, were going to be tough there. I accept he may just be beginning. But i wish hed put out some options that would really make putin think twice. Youre right. The Energy Factor is a big one. In the short term, there are things that one can do that takes advantage of a pretty warm winter, pretty large stocks of natural gas in ukraine and in other places. In the short term, there are some things that reduce the leverage that the russians have over both ukraine and over europe. In the longer term, absolutely. The United States should be exporting gas and should be improving the energy market. Those steps take time. And they should be done, but we cant effect the russian behavior in the immediate term with those kind of things. As i said, getting rid of the export act, the export prohibition act, that could be done overnight. How about permitting . How about the president saying, okay, im going to permit 25, 35 or more lng plants, projects, installations. We know its going to take a while, five, seven years to come online. Through this is new american policy. Once thats done, were going to export. That would have an effect. The russians would have to listen to that. They would have to listen to that. Again, thats not going to affect them in the short term. In three, five years, it reduces their leverage. Their leverage is reduced immediately because of the stocks, the stocks that are already on hand. But thats the kind of thing that needs to be taken into account. Ms. Stint, let me go back to you, to senator mccains talk. Mccain wants the president to announce some military assistance to the ukraine. Mccain wants to see nato with a greater show of strength around the baltics and poland and the Czech Republic. Mccain wants more discussion. I think hes probably in favor of looking at reinstalling some Missile Defense systems for poland and the Czech Republic or a radar system or both. Do you think president obama is having that conversation internally . Im not saying go to war, im not saying boots on the ground. But i am saying reverse what we thought was londgstanding u. S. Policies until this socalled reset took place . Im sure theyre having these conversations internally. Weve already beefed up we have more nato patrols in the area. Weve been meeting with the baltic states, nato has, and poland, reassuring them were dedicated to their own security and guaranteeing their security. The defense, if there were any attack on them there are things that were already doing. But you have to tread very carefully because were still trying to give diplomacy a chance to work. Were still trying to give mr. Putin a way of at least not escalating this in Eastern Ukraine. This is a very delicate and fragile situation. There are already fights breaking out in Eastern Ukraine. I think we do have to be very careful and we have to have these sanctions but we still have to try to negotiate something with the russians to get them at least to back down from any further incursions because putin has said, if these russians in Eastern Ukraine call for our assistance, were going to assist them. And then youre going to get civil war in ukraine. And nobody wants a civil war in ukraine. Charles dallara, i assume crimea is lost to russia. Fair assumption or not . It certainly seems to be. There is the fundamental question which was just mentioned about annexation. I have to say that as we focus on crimea, i think weve also and as we focus on sanctions and i do think there is scope for and most likely need for an acceleration of a broader set of sanctions here, economic and financial. Weve also got to focus on the ukraine economy. It is in desperate need of support, larry. The previous leaders of the ukraine allowed this economy to deteriorate to a frightingly feeble and fragile state. And i think they need to move expeditiously to provide additional support. They could do so in the range of 15 billion to 20 billion injected into that economy and give stability and hope to the ukrainian people. Charles, youre an expert on these International Financial questions. Do you expect president obama to upgrade the financial banking and visa sanctions, particularly the financial and banking sanctions . Do you expect him to do that . I think he will have little choice, larry. I think that there is going to have to be a move into tighter sanctions here if we are to expect to have any impact. And even that impact, we have to be realistic, will be very limited in the short run. But i think we know the iranian experience and other experiences do demonstrate that an accelerated program of sanctions im not trying to compare russia to iran now. But an accelerated program of sanctions can biteover time. Its a question not only of the Financial Impact but of the signaling impact. Ambassador taylor, i want to give you the last word. From what you know and what you see right now, do you believe russia will invade Eastern Ukraine . I think they would make a horrible mistake if they invaded Eastern Ukraine. And i think that they recognize that the sanctions, the broader economic sanctions, the financial sanctions that weve talked about here are biting and will bite and will come into effect. But from the United States as well as from the europeans, if he were to do that. If he were to do that and show leadership. Well leave it there. Thanks to all of you. I appreciate it. Our next guest argues this is interesting, total employment is actually falling, not rising. He sees what he calls hidden rot in the job numbers. Well explain all that next up. And later, two kudlow report alltime allstars will join us. Theyll be back to talk live on everything, obamacare, the 2014 midterm elections. Dont forget, free market capitalism is the best path to prosperity. And we hope president obama defends that theory and helps the ukrainian people. Im larry kudlow. Well be right back. Let me talk to you about retirement. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable, professional. Would you trust me as your Financial Advisor . I would. I would indeed. Well, lets be clear here. Im actually a dj. [ dance music plays ] [laughs] no way i have no Financial Experience at all. That really is you . If theyre not a cfp pro, you just dont know. Find a certified Financial Planner professional whos thoroughly vetted at letsmakeaplan. Org. Cfp work with the highest standard. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. 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. Most economists are going to tell you that jobs have been rising, maybe the recoverys not so bad after all. But in an oped today in the wall street journal, our next guest says if you dig a little deeper into the number, employment has actually been falling over the past six months. Here now to tell us why, ed lazear, president george w. Bushs chief economic adviser, now a senior fellow at Stanford Universitys hoover institute. And if im not mistaken, a professor of economics at stanford university. Ed lazear, welcome back. Hell of an article. Youre basically saying when you look at the numbers the right way when you dig into them, we havent had a 900,000 job increase in the last six months, weve actually had 100,000 job, is that correct . Thats right. Youve got it, larry. And the reason is that we have more people working but theyre working fewer hours per person. When you take both effects into account, the total amount of hours worked has actually fallen since september. Now, hours worked, you say, is a key variable to look at. On wall street, its always nonfarm payrolls and private payrolls right. Sometimes the Household Employment report from which the Unemployment Rate is derived. But youre drawing attention to private hours youre point is they have been slumping over the past six months. Thats right. There are a couple of reasons to look at hours worked. One is, hours worked tend to be a leading indicator. So they tend to move before the rest of employment moves. If you look at early parts of the recovery, hours picked up, that was a good thing. That went largely unnoticed and it shouldnt have. On the opposite side of that, over the past six months, its gone in the reverse direction where hours are falling. So we worry about that. We worry about it because when hours fall that, suggests that Something Else is going on in the economy. The second reason is if youre thinking about Overall Economic activity, just think about the following. Suppose you had a firm that was employing 100 workers at 40 hours a week and replaced them all with 120 workers with 20 hours a week. Which would be the better situation . Obviously the former has more hours of work, a heck of a lot more Economic Activity than the latter. And yet number of jobs would have gone up. But thats not the right way to think about it. We need to convert jobs into equivalent jobs where equivalent jobs takes into account the number of hours worked as well. Which, if im not mistaken, is exactly what the cbo, the congressional budget office, did if its recent jobs evaluation of obamacare. They say that we will lose the equivalent of 2. 5 million jobs. Now, i believe that they were looking at hours worked and the disincentive for hours worked, is that right or is that wrong . Thats correct. Theyre looking at this for incentives to work. Theres been a lot of talk about that. I must say, ive found most of the talk confusing rather than actually shedding light on the issue. The problem has been that people say, well, thats a good thing because individuals are given choice, theyre actually getting out of the labor market because they dont have to stay in the labor market. Well, thats true. Everybody likes subsidies but that doesnt mean that subsidies are a good thing. If they distort the decision to work, theyre not a good thing. In fact, what cbo was pointing out in their report is there is a distortion to the amount of work that actually occurs. And thats particularly problematic because we already have underincentives to work because people are taxed on their labor and dont get the full rewards it from. The last thing we want to be doing right now is moving people out of the labor force. Just like a lot of entitlements. Just like all the entitlements, at least the smaller ones. You lose your benefit and you may move into a higher tax bracket and your marginal tax rate may with 70 mer , 80 . So why work . If we dont work, we cant produce. If we dont produce, we cant have an economy. Work is a virtue. Its how you produce. Work is what makes men great. They dont work in europe. I get that, okay . But they dont produce anything over there. Dont we want to work and isnt that why youre watching hours worked because its an indicator of the whole economys health . Indeed thats right. The strongest form of job lock is wages. You are locked into your job because you want to earn wages. Obviously we dont think of that as a bad thin