$1,017.98. all right? call it $1,018. the u.s. greenback on the dollar index in the last sick months has dropped 14%. we are losing ground against the yen. sfwra ja pan will flefr grow in our lifetime. we're losing ground against the euro. this has annerly '70s feel. weren't the policies in the early '70s, big spending, falling dollar, rising gold, and rising tax rates? after that, what does it mean for inflation or stagflation? >> that's right. stocks were sometimes going up in the '70s, but not against gold. you're better off being against equities in that period. even though in nol mall terms they went pup a corporation -- most of what productivity the

government picks up is big corporations. and they get productivity by laying people off. so what we see is like the 1970s, a high unemployment rate, some productivity growth, but not a feeling of living standards that penetrates people. >> so joe, what happens if the government takes over the health care system? >> that's the problem. that is a pay jor problem, no question. but on the '70s parallel, inflation was starting from a much higher point. the banking system was much healthier, the assets behind the banking system, housing at the time was rising. totally different environment. but the health care, i agree. that's going to be a problem if it gets pazed. >> joe, it's pretty easy to see us getting to 57% inflation rate. maybe not 17%, but 7% would realably bad for living standards. >> you know, all items are up 0.4%. okay, the core was up 0.1%.

but you've got some creeping -- let's put the cpi on the board. nobody is paying attention. it's creeping. it's creeping higher. and dave, can we have a high unemployment rate on a rising unemployment rate if money is too loose? >> of course we can. foreign countries have shown us that experience over and over again. when economies go down, they make it up by raising prices, even if a recession is going on. >> i'm bullish on the economy for the next year, but i've got tot ask this question in the longer term. what about this creeping inflation and what's that going to do to incomes and incentives? >> larry, if that was much inflation, you would see a different performance in the t.i.p.s. markets and the inflation expectation survey. >> gold means nothing? >> i'm dismissing dpold. it's become an asset class. it is reflective of a weak dollar. i don't believe it's reflective of the '70s. >> larry, i want to get you from the inflation problem to the

living standard and capital fleeing the united states. to me that's a bigger worry and the fed should paut stop to it but giving some underpinning to the dollar. >> if so much capital is leaving why is the ten-year still at 3.50. >> all i can say is you can not tell me that the dollar is going down the drain and gold is climbing the flagpole that those are wonderful economic indicators for america? but i'm with you on the v-shaped recovery in the short run. thank you. coming up, a triple-point gain for the dow. yep, the dow is hot as a pistol. so is the s&p 500. we're creeping closer to 10,000. whatever happened to the september swoon? i'll tell you. it's gone. we'll be joined by influential market guru who said there wasn't going to be a correction. we'll be back in a few moments. first, let's check in with dennis kneale. >> dow 10,000. we're on the way. but where from there do we go? also, two democratic congressmen

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the dow is up 108 points today. the nasdaq up a whopping 31 and the s&p 500 which 1069, up 16 points. stocks are roaring. the summer rally is up 22%. the s&p 500 up 58% over the last six months. we have to ask, where is this september stock swoon that everybody has been waiting for? stocks are up over 1% today. they're still up 50% from the march lows. look, influential investor lazo berini had it right back in august when he said, i'm going to quote. birinyi, former hall of fame

ruc ruckheiser elf joins me now. you nailed it. what happens now? >> goes higher. >> how much higher? >> well, i'm going to throw a number out there you're not going to believe. if we go at the rate we've been going, we could be over 1200 by the end of the year. >> on the s&p 500? >> on the s&p. >> how might that equate to the dow? >> i expect the dow to hit 10,000 this month. >> so this is the prelehman levels? >> oh, yeah. >> why were all the correctionistas wrok? >> they didn't do their hork. we had 424 days without the first correction. in 1990, we went six years before we had a 10% correction. >> they're still saying it. i have never seen so much bearishness in the middle of a market rally. i've got all these guys come on the network and hedge fund guys writing brilliant articles saying the correction is here,

the correction is here. the economy is terrible and the stocks are going down. it ain't happening. what's snup. >> they're not invested. they missed the train. it's left the station without them. >> are they short? >> probably not short, but they're trying to talk the market down. >> we have never seen that before, have we? all right, we are going to come back. he's going to tell us what key sectors and themes. i want to ask him about banks and financials which i think have been the backbone of this entire market rally going back to early march. can it continue? we are "the kudlow report." we'll be right back with the new bull market. urate reading. okay...um...eighteen pounds and a smidge. a smidge? y'know, there's really no need to weigh packages under 70 pounds. with priority mail flat rate boxes from the postal service, if it fits, it ships anywhere in the country for a low flat rate. cool. you know this scale is off by a good 7, 8 pounds.

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all right, we're back to a roaring bull market. the september swoon never happened and stocks are rallying on daly basis. we have laszo birinyi with us. we're going up half a percent to a percent a day. the s&p 5001059 today, the dow, 9792 today. just give me a sense, how high can this thing go? >> the s&p is running 25 basis points a day since this rally started. we're looking at 1,200 or so. . >> we'll call it 1070. so we've got a ways to go. >> the momentum is there. and if i had to buy a put at

1,200 or a call at 1,200, i would buy the call. >> wow. okay, so you're a great bull. now, banks and financials have seemed to be the backbone since early march. financials are up 3.5%. cheap? rich? still buying them. what do you do? >> we're still buying them today. now they're trading about 18, 20 times earnings. so on a fundamental basis, the banks had one heck of a move. historically, banks are market performers. in this bull market, they've been leaders. they're up over 100%. so i think it's a little late in the game for banks. >> all right, late in the game, though, for another rise. >> gold, i take it you don't agree with my concerns about a gold rally? heck of a rally? >> well, maybe it's because of my age. but i remember when gold went from 300 to 500. and i remember in 1990 when we

had a strong rally and sometimes i think gold doesn't indication inflation of the dollar. sometimes gold is like dr. freud's cigar. it's only a cigar. >> but gold went from $250 in 2001 to $1,000 in 2006 urks 200. and paralleled the inflationary bubble in real estate, energy, commodities. you don't think there's a repeat signal with a zero percent interest rate from the fed? >> again in the '80s, it was the same and we had almost a double in the commodity. gold tends to do well in bear market rallies. i don't know why. >> new 52-week highs on the new york stock exchange today. what does that mean? >> i don't think it means much. you really -- a lot of these things if you look at them historically and we've done that, you find that -- they're not lead indicators. they're diagnostics and they tell you where the patient

stands. let's get on with you. >> is there anything that worries sglou. >> the breadth is too strong. i would like to see people being selective. >> what is the prettiest of the bunch? >> technology. >> you're going to ride the tech horse. you made a great call. you made a lot of great starts. we have an exclusive interview with california gubernatorial candidate and former ebay ceo. that's meg whitman tomorrow evening here on cnbc. "the kudlow report" tomorrow morning on the call. we'll be back in just a moment. welcome to the now network. right now five coworkers

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