these days need to merge, okay? they need to merge and they need to merge now. >> these are looking pretty good. they don't have any shirp but i don't think a pancake should have caviar and champagne on it. a good pancake is sweet. i'm sorry, it's not savory, it's sweet. >> thanks for watching "street signs," everybody. cheers. "the closing bell" is next. what is day. stocks are trying here for their best day of the trading year. welcome to "the closing bell." i'm kelly evans at the new york stock exchange. >> welcome back. >> great to be here. >> a classic turnaround tuesday. yesterday the market punishing vladimir putin. today some say he blinked, because of that stocks are off to the races and then some. the dow up near the highs of the day. we were up 240 points at the peak. now a gain of 231 points and the s&p is back in record territory right now. >> in order for it to be the

best day of the year, the dow has to add more than 198 points. it's having no trouble doing that right now, bill, but as we know, the last hour this year and, in fact, part of last year as well has often been when we see the market pull back a little bit. we've seen rumors again, reports actually, we just confirmed about perhaps some russian activity in the southern region near chechnya. >> the russians tested an intercontinental ballistic missile. but we apparently already knew that about. it was a test that was already scheduled. it went successful, it was a nonevent so we move on. >> and move up. >> the markets moved up on that news. >> and a reminder, here is where we stand. the dow adding 235 points, 1.5%, same for the s&p 500 at 1,873. less than 2% from 1,900 and the nasdaq adding almost 75, 4,351 is the level there. strong day.

>> yes, it is. let's talk about it in our closing bell exchange. gemma godfrey from london. we have amy wu, dick burrige. tom carsten and our own rick santelli. ji gemma, your markets were very strong this morning. but you say the damage has been done. what are you talking about? >> it's a chance to buckle up because we're hin for a bumpy ride. the political tension has eased but the damage has been done and most importantly across the world the stocks are still trading on the news. it's looking more likely tit's going to be a difficulty want diplomatic struggle. the ukraine is still approaching

bankruptcy and the most important thing we're seeing is the stocks that sold off the most yesterday that are rallying today are in the financial sector and in the tech sector and that's an overcrowded area where stocks -- there are great opportunities there, but they have been overcrowded and expensive, and, therefore, these momentum driven stocks are the ones that are actually trading off this news showing sentiment and political risk is still driving markets. >> it's so interesting, dick, we're probably going to have this kind of uncertainty along the europe/russia line, if you will, for some time. i mean, no one can guess now what the outcome here could be. in the meantime, the market is telling us something today, it feels almost like a spring beneath stocks today. is that your read here? >> it is. i would agree with that. i do think that we're going to continue to experience volatility, especially in reaction to something like what's happening overseas in ukraine. i think those are going to be short, shallow opportunities,

won't change our view at all. i think the momentum in the stock market as we saw today is very strong, and i think the market is also reacting delayed by a day or so to stronger than expected economic news. we'll see more of that later this week. >> amy, you gauge investors' sentiment. what does it tell you right now when you watch the vix and other things, is the expectation for more volatility? you know, and how did you see it yesterday even at the height of the tensions in this market? >> well, you know, i would characterize it as being relatively expected. you saw levels pick up across the board. you did see a flattening of term structure yesterday. all that has reverted, but one important point i'd make is there is no panic buying. we're not seeing skew levels shoot up. we're not seeing huge tail hedges implemented. it still seems like par for the course for u.s. investors, nothing really outside their normal hedging programs. >> yeah, this is a rather

lightly traded day today, isn't it? low volume. i'm surprised you didn't bring that up. >> you know what, thomas, i wonder what we should make of the lighter volume, significant, not significant? should we just get used to the fact that volumes aren't quite as heavy? is this the new normal? >> sure. it very well could be. i think what you're looking at, i think i agree with a number of the other guests, the situation, as long as it plays out as it is currently, it's kind of a stalemate, and i think the longer that goes on, the more, you know, that investors really think of that as the status quo. now, longer term though if this does develop into some sanctions, then that's going to be harder for the european zone because they're already trying to recover from the recession, and so any limits that are placed in that region certainly are going to have an impact there, and that may fold out into some of the developed marks but for now in the short term it would appear while there's certainly a lot of exposure in emerging markets many of the developed markets such as the u.s. are viewed as safe havens and today is a clear signal that investors are simply shrugging

it off. >> let's bring rick santelli in here. if it's up yesterday, it's down today and vice versa. does that mean it's over? how do you read the market response? >> i thought yesterday it would be over. listen, what's going on in the ukraine is a serious foreign relations issue. might even be a big issue with regard to what the eurozone has to do to try to either expand or the ultimate fate of ukraine, but in my opinion the markets are done with it. doesn't mean it's over but i think the markets are done with it. today for a while we were flirting with an eight basis point up day in treasuries. i went back through my records, and i don't think we've had an eight basis point or larger up day since the 4th of september. so it has been a while. and i think that is very important because as we go into adp tomorrow and the jobs report

friday, it really does underscore we're probably going to have a tale of two markets. on good data stocks are going to fly. on bad data they're not going to sink much because they're going to blame weather, but it's how treasuries react, especially after kind of equalizing today, how they look tomorrow on the close and friday will be very essential, and if you happen to be a prudent saver who likes to eat and whose house is heated by natural gas, you're having a really bad day because it looks to me like live hogs have traded limit up the last four days, so we see whether it's pork or whether it's beef or whether it's nat gas, a lot of commodity prices moving higher, but cpi, nothing to worry about there, folk. >> what inflation, right? >> gemma, what is the lesson here? i wonder if you haven't looked at the activity year-to-date and said, you know what? it takes so much work, massive, crazy storms, weather excuses, whatever it is to drag, drag, drag this market lower and then, boom, on a dime as soon as all

of that goes away, the bias to the upside is revealed. >> exactly. there is so much will for markets to drive higher, and what you see is -- when you see this correction, you see it in the stocks that have potentially got a bit frothy. as soon as they fall the investor will to power back in there and use it as a buying opportunity is there. investor strategy, this barbell strategy, let's look at treasuries, let's look at potentially, you know, safe havens, but at the same time still looking for growth, still that optimism is there, and, for example, investors are investing in europe in the periphery now. you have got this very disparate strategy that's out there showing there's confidence but there is a little aversion there but nobody wants to miss out on any of these rallies. they know longer term the place to be is the stock market. >> dick -- >> i would agree with what gemma is saying. i think that in addition to the sentiment of most investors, which is that they've seen great

returns over the last year and they don't want to miss out, there's still an abundance of cash in the market until, you know, we still got things happening in the united states and there's a lot of cash on the balance sheets of companies and in individual's accounts and they're going to put that to work whenever we see any kind of weakness. it seems the buyers step into a lot of those equity positions. >> amy, why aren't we talking about complacency? we're all taking this for granted -- taking it in stride. i'm not saying we're taking it for granted. we're taking it in stride. the geopolitics, this is very important stuff, and now we're talking about how the markets are feeling like it's all over at this point. it may not be, but they're acting like it. isn't that classic xlcomplacenc? >> absolutely. but the problem is i feel a little bit like the option strategist who cried wolf because we've been talking about how low options volatility has been for a long time. we've been talking about how high payouts are on put spreads, and anyone who has enacted them

had 30% market up in their face last year. so it's a question of fear of missing out versus fear of downside. i don't blame people for wanting to be complacent here because the idea of missing out is so much more of a greater fear right now. >> isn't that the kind of fear you feel at a top, not at a bottom? >> mike and a couple of economists have recently done some interesting work on this saying it is exactly that need to kind of outpace or match the index that can drive market volatility here, tantrums as they call it, even when there's not a lot of lennage agleverag system. it's march 4th, we're coming up on the fifth year anniversary of the bottom of the market. we're up 172% on the s&p since then. the top three sectors during that time, health care, up 430%, consumer discretionary, up 321%, financials up 250%. and thanks to rich peterson for all of this. what do you think are the top three sectors to bet on for the next five years, thomas?

>> who is that question for? >> thomas, sorry. go ahead. >> for us we think that there's a little bit more rotation back into some of the reit stocks. they were really out of favor last year because of the moves interest rates made. and a couple of ours in our portfolio have done really well year-to-date. a lot of our clients who are near retirement, in retirement, they need income in their portfolio. they're starting to gravitate back there now that we see a little more stability in interest rates. as rick pointed out, we've seen a bigger change here today, but we think there's still a lot of value in energy and in the tech sector in the larger cap names. >> we, on the other hand, we would be careful -- very quickly, we would be cautious hardi regarding any yield plays or income plays. i would be positioned to play a stronger than expected economy. small banks, community banks in

particular are still very cheap and we're in the middle -- we're in the beginning of a consolidation in that industry. so i think that's a great sector to be in. >> so you feel interest rates are rising as the economy gets stronger there. very interesting. thank you all. >> fascinating. >> appreciate it very much. as we sit here, we are near the highs of the day right now. the dow four points off that high we hit earlier in the session with a gain of 235 points. >> we have 45 minutes to go to the close. if at first you don't succeed, try again. that has been the president's motto when it comes to the federal budget. he's trying again today. we'll take a look to see who would be paying more in taxes if he gets his way this time. renowned bond fund pimco has been in the headlines lately with its headline grabbing management changes. we're going to talk with its new deputy chief investment officer about what is ahead for pimco and what was her reaction to that "wall street journal" article saying that bill gross made pimco a tough place to work for. we'll find out coming up. and he's just days removed

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yes, one day has made a big difference. the s&p down sharply yesterday, now aiming to close at a record today. >> and the dow going for its best day of the year. bob pisani, how does this reflect on the latest moves over in russia? >> well, steady as she goes here. the key point is there's much less likelihood we will see tanks rolling through kiev which they seemed to be pricing in yesterday. we've been straight across right at the highs for the day all throughout the late morning and into the afternoon. these are historic highs, not just for the s&p, for the russell and for the midcap. i want to point out very heavy volume in certain etfs. i pointed this out throughout the morning. the russell 2000 etf. the small caps leading here. this has had huge volume. 2 1/2 times normal volume. this is one of the etfs that's used as a hedging vehicle.

i see a lot of people coming into the market using the small caps. across the board gains, it's very unusual to see nine out of ten s&p sectors up more than 1%. it doesn't matter if you're defensive names or cyclical names, health care, financials, industrials, it doesn't matter. right across the board, 7 to 1 advancing to declining stocks. the only point i would point out, the one thing i would make is look at the ten-year. this is not signaling somehow economic news is better. a lot of the naysayers down here, and there's a few of them left, keep saying watch the bond market. that's the one that's still not moving. guys, a lot of attention focused on that nonfarm payroll report on friday. back to you. >> yes. oh, by the way. thanks very much, bob. it was back to work in washington. president obama's 2015 budget was unveiled. it calls for tax increases on the rich to finance tax cuts for the not so rich, but it has little, if any, chance of passing politically. possibly that's another reason why stocks are higher today,

right? >> john harwood joins us with some of the defails on this one. john? >> there are two distinct parts of the president's budget. one part has to do with the budget world as it is under the peace treaty that paul ryan and patty murray struck a while ago, that is spending levels that have already been agreed to. the other part is the budget world as the obama administration would like it to be. it's not going to be realized this year, but he's trying to lay out and make an argument about what the shape of a deal will be ultimately when they have -- when republicans and democrats decide it's time to negotiate one. here is the president reflecting both sides of that. >> this budget adheres to the spending levels that both parties in both houses of congress already agreed to, but it also builds on that progress with what we're calling an opportunity, growth, and security initiative that invests in our economic priorities in a smart way that is fully paid for by making smart spending cuts and closing tax loopholes that

right now only benefit the well off and the well connected. >> so what the president is talking about is his proposal to have a $56 billion increase in the sequester caps similar to what was done by paul ryan and patty murray earlier in the year. that would be equally divided defense and domestic programs. not likely to be negotiated this year. some of the tax increases the president is talking about on carried interest, on limiting the deductions for high-income taxpayers, the buffett rule, not likely to be enacted, but there is going to be at some point before too long, maybe in 2015, perhaps early in the next administration, there will be a budget negotiation and some of the things the president laid out will be part of the conversation just like the tax plan dave camp laid out last week. it's not passing either but it will influence the future debate. >> john harwood, thank you very much as we keep an eye on

markets rallying to highs of the days. more on the budget with jim nestle and jared bernstein. great to see both of you. and look, jim, john just made this point that whether it was the proposal from congressman camp or president obama's budget, everyone is saying it's dead on arrival, you don't need to worry about it. frankly, it does feel as though we're seeing an emerging template for tax reform. in your view what could come out of this in the year or two ahead? >> you're right. if you're looking for a silver lining on a day when generally speaking you've seen the president propose what is a budget that's really not going anywhere, the silver lining is what's happening on tax reform, and it's really going to happen in the congress. the president has pretty much checked himself out of the reform process. i think the new finance chairman in the senate, senator widen, and dave camp as well as the potential of paul ryan coming to the tax committee, i think that gives us a silver lining and

some hope when it comes to comprehensive tax reform. and the second item is what secretary hagel did in defense spending looking forward and saying, you know, we need a post-9/11 defense posture. we need to re-examine our military industrial complex and how we're going to budget for it in the future. and so i would agree there's two silver linings even though the debt is exploding. we're talking 4x leverage debt that's being brought onto this budget, and that's really unconscionable. >> jared, let's face it, the president merely is planting a flag for an election year with this document. he's not really expecting this budget to pass any shape or form, is he? >> no. but i'd say it's more than planting a flag. i'd actually agree with jim in the sense that what we're doing here is looking for components within this budget where the two sides might find some compromise. >> like what? >> so, for example, you heard the tax piece that jim

mentioned. i disagree that the white house is out of that loop. in fact, if you look at the president's corporate tax proposal, and by the way he was first on that, dave camp followed him, there's actually some room for agreement there. not only is the thing structured somewhat similarly, but they take some of the benefits, the one-time transition resources which in the president's budget amounts to about $150 billion, and they apply it to infrastructure investment which both sides want. an expansion of the earned income tax credit for childless adults. that's the kind of thing where you might find pieces in here to pull out. >> jim, do you think this is the time that they'll change the way that, for example, the private equity industry is paid by saying you'll be taxed at the higher capital gains -- the higher income rate as opposed to capital gains? >> well, i mean, there are certainly puts and takes everyone is going to find agreement or disagreement with. unfortunately, i don't think this is the time for comprehensive tax reform.

i wish it was, but not -- certainly not in 2014. whether or not the president is willing to provide the leadership necessary, and it's going to require the president's leadership in order to do any kind of comprehensive tax reform in 2015 or '16, that remains to be seen. i would say that jared is right that putting some of these items on the table is not a bad start, but clearly the main nuts and bolts of the work for this is going to have to come from these two new chairman, widen and potentially ryan, and that's going to be a very interesting process to watch moving forward. >> oh, yeah. >> even as we sit here chatting, the market continues higher. you know, i think we can agree that if the hedge fund industry thought this thing was going to pass, the change in the carried interest, that this market would not be rallying right now, don't you think, jim? >> the market might be rallying because jim and i are talking. >> good job, jared. >> in terms of the carried

interest loophole, it's actually pretty hard to find people -- i'm interested if jim agrees with me, it's hard to find people who don't view that as a loophole. now, i get that the people who face higher tax rates when that gets erased maybe don't love it, but the fact that we have private equity managers and fund managers being taxed on their earnings based on capital gains rates, most people don't see that as very fair. >> real quick, jim? >> yeah, and i would say that's probably not all that unusual even within the private equity firms to understand that. but we've got a lot of work to do on this budget, and i just wish that congress in addition to tax reform would look at how the money is spent, not just how much is spent, and work on getting better results for the money. you know, money ball, using those principles of how the money gets spent in a much more effective way. the spending side really -- >> we need a hollywood movie maybe. >> well, there is one on that.

>> get michael lewis on that. >> good luck with that. >> thank you, guys. >> thanks, guys. >> check our exclusive interview. coming up we'll talk to president obama's budget pregnanter sylvia matthews burrwell in the next hour of "the closing bell." we have about a half hour to go. a little more than that, bill. as mentioned, the dow just off the highs of the session, up 250 points. >> this feels like 2013 again. lately we've seen sell-offs in the last hour. not happening today. a strong day and we're finishing strong, at least so far. meanwhile -- i don't want to jinx it. dawn of a new era of television distribution might be upon us. details of a ground breaking deal just ahead. russian president vladimir putin dialing back the rhetoric today but dialing up a stock market rally here as more than 15,000 of his troops remain in ukraine. up next, we'll talk to our most recent ambassador to russia, michael mcfaul, an how he dealt

with putin and what the end game here may be. that's coming up just after this. ♪

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responsibility. what's your policy? it is relief rally day on wall street, as it was in europe earlier this morning after vladimir putin's news conference at which he seemed to step back from the crisis in ukraine, and it may not be over, but at least the tensions have eased. so the dow is up 235 points. we were up 250 at one point today. the s&p in record territory, up 28 points at 1874 and the nasdaq

up 76. like i said, if it was up yesterday like gold and oil, it's down today. >> mirror image. >> meanwhile, president putin is talking about stepping back, breaking his silence over ukraine earlier today. >> but the u.s. and the rest of europe not hearing the words retreat or departure in his remark and he said russia reserves the right to use military force. for the latest on the crisis let's get to nbc's ian williams fwilliams. >> reporter: we saw the first shots tired in this crisis today in a tense standoff outside a base in crimea. this base had been sealed off by armed russian soldiers, but about 300 ukrainian soldiers who work inside the base marched on it unaround amed and demanded t entry, they wanted to go back to their jobs. the russians fired warning shots above their heads and threatened to shoot them in the legs.

luckily it was defused before anybody got hurt. there was also a rather surreal side to this because in his press conference today, the press conference you referred to, vladimir putin denied there were any russian soldiers occupying crimea. that was derided by john kerry who was visiting kiev today. kerry came here to lend support to the interim ukrainian authorities and also with an aid package offering $1 billion of loan guarantees as well as american expertise with the central bank and also with organizing the next election, but clearly a lot to be done here to stabilize this economy, bill. >> ian williams there in kiev. thank you very much for that update. let's bring in someone who has met with putin, has pretty good read on how he operates. professor michael mcfaul is, of course, the most recently -- the former u.s. ambassador to russia. mr. ambassador, good to see you. welcome.

thank you for joining us. >> sure. thanks for having me. >> which vladimir putin do we pay attention to most, the one who acts as he did over the weekend or the one who speaks as he did today? >> well, i think both, and i think even in the press conference, which i saw this morning that he did, you saw the two different sides of putin. on the one hand, he did say as has been reported here that we're not seeking to annex crimea. we want to see a peaceful resolution to the political standoff in kiev, but he also said the government in kiev is not legitimate. it's a revolutionary government, and, therefore, russia is not constrained to abide by the commitments that they made to ukraine to respect its territorial integrity. that was a very ominous threat, if you ask me, and i think he hasn't decided how -- which way he wants to go yet. i don't think he knows what his end game strategy is just yet. >> could you ever ascertain that? would you be willing to go out and describe what his end game

is in this situation, in this context? >> well, i know what his big strategy was. i mean, is just working in moscow just last week, right, and the main strategy that he wanted to achieve in that part of the world was to create this you're ray sha economic union. they were feeling pretty good about that a few months ago when president yanukovych decided not to sign up with the european union. however, yanukovych's government collapsed, he fled, and putin was embarrassed by that. he felt like his main supporter in ukraine had been overthrown by the west, and so crimea was his response to that. i don't think he's thought about where it goes after that. i really don't think he's decided yet. >> and i suppose what i mean by this is, you know, to what extent was there a real understanding of what putin had in mind given that the presence of any russian troops in the

ukraine at all seems to be something that took the administration completely by surprise? >> well, i was in the administration five days ago. i would not agree that it took us by surprise. this is something we've been worried about for a long time because of crimea's special status. but you have this contradiction because on the one hand putin is playing a 19th century game by invading countries and occupying territory and on the other hand he wants russia to build a modern economy, and he knows that he needs western technology for that. he knows that he needs western investment for that. this is a contradiction to that other objective of making russia a great economic power. >> ambassador, good to see you, thank you for your time. >> thanks for having me. >> you bet. >> it's a great perspective to have. >> you know, russia is a member of the g-8. they should act like a g-8 nation now. work through the context of the g-8 if they want to rebuild the ukrainian economy. you don't need to invade like

they used to in the soviet era. >> that was one of the threats secretary of state kerry seemed to dangle out there, saying are you or are you not a g-8? because we're happy to convene a g-7. the dow is adding 238 points at this hour above the level of 16,400. we're seeing the s&p within striking distance, bill, of another record high here. regaining its record close perhaps. 1,874. >> that is in record territory. pimco, the firm that's been in the news a lot recently, we will ask its new deputy chief investment officer about what she sees as the strongest investment plays for the rest of this year and what about that wall street journal article saying that bill gross makes pimco is tense place to work? get her impressions on that coming up. stick around. also oil is front and center with the russia and ukraine crisis in the backdrop. the ceo of total s.a. that interview is straight ahead.

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warren buffett said it would be like this sort of. we were just talking during the break about how he had said yesterday on "squawk box" he would use a sell-off like yesterday as a buying

opportunity. so if you'd done that, i guess you would have made some money today. the dow still in strong territory up 238 points. was up 250 at its peak. the s&p is in record territory right now with a gain of 29 points, and the strongest of the major averages percentagewise is the nasdaq. technology doing very well today with a gain of 77 points. now, let's get to our own seema mody. seema? >> we're going to begin with a general electric ceo jeff immelt spent his entire 2013 cash bonus of $2.6 million buying ge stock. you can see shares higher on the day. and then there's jcpenney moving higher after standard & poor's raised its credit outlook on the retailer to stable from negative saying sales have turned the corner. russian stocks rebounding today after selling off as the crisis in ukraine eased up a bit. qiwi, mobile telesystems, and

yandex. delta hitting a record high after revenue rose 4% from the same time a year ago. on the flip side, cliff's natural resources, it fell as wells fargo downgraded the stock to underperform from market perform due to a challenging macroenvironment. shares down 2% on the day. bill? >> seema, thank you very much. so big down day yesterday, we've had plenty of guests through here, including warren buffett, who said they would use it as a buying opportunity, and at least for today they were right. >> that's right. our next guest taking it a step further saying any volatility in this climate becomes a buying opportunity. joining us with more, virginie maisonneuve. great to see you again. >> nice to see you. >> so this market, let's just start with what's happened this week against this backdrop. are you being opportunistic here? what are you loading up on, if anything? >> well, i think, you know, you really have to look at it over the next 12 to 18 months as the world continuing to be in

transition. we have transition all across the world. clearly in the u.s., you know, going from tapering to normalizing, in europe clearly with banking union and a lot of political issues. in china going from an investment model to a more reform-orijooriented model and japan with the third arrow waiting, and finally emerging markets that are really trying to adapt to the tapering model. so all of this over the next 12 to 18 months will create some level of uncertainty and some level of volatility. all this said though, if you keep a long-term time horizon, you'll see that there's absolutely room in a portfolio for equities in an environment of low rates, even if they're going higher, they're going higher in a very slow fashion, if you want. growth is subdued but is still supportive. so that's overall an environment where you want to be in stocks. >> you know, you're the big picture type of investor, and the big picture for the u.s.

market for the last four years has been all of the easy money policy from the federal reserve and plenty of people feel like that's why we are sitting at all-time highs right now. so why wouldn't it reverse itself as the fed begins to pull back on the easy money and even if it starts to raise interest rates sooner rather than later, why isn't this a time when the market starts to retreat, where are we still going higher now? >> well, i think although, you know, we're expecting a normalization of rates at some point in the future, we're not talking about something very quick or very drastic. and at the same time the world is healing from its traumatic experience, if you want, from the crisis. so all of this is supportive. now, actually, clearly from the lows of '09, we have made a lot of money. so from here i would say it's not a top down play on equities. it's really a stock picking exercise. you have to find companies who have restructuring potential or niche area. one area i really like is companies benefiting from what

needs to be done around the climate change, mitigation and adaptation, and those companies can be tech companies, industrial companies. there's a lot of new markets for them to have, and that's one area i like very much. >> virginie, we talked about volatili volatility. it sounds like a lot of volatility is at pimco these days. the journal drawing attention to it. bill gross was on air the other day defending that and saying there are stylistic differences but there's no fundamental problem. how have you found it in newport beach? >> well, actually i really like it. i just joined in january. i'm very excited about, you know, being here to build equities here at pimco. clearly it's a very direct culture which i'm very comfortable with, and, you know, i'm loving it. so we're fine. >> and one more thing because i know equities for pimco is only about 3%, something like $50 billion. how big is that figure going to

get over time if you execute your strategy? >> well, i can't give you a number exactly, but i'm telling you i'm here to help grow it clearly. not only on my own but with my teams and the support of all the environment and resources here at pimco, and as you know, this has been a fantastic success story in terms of, you know, a firm that has grown to be the major manager in the fixed income pashtmarket, but has a l interesting products in parallel areas. i'm excited to be drying this forward. >> and the weather is all right, too. >> newport beach isn't bad. >> thanks, virginie. appreciate it. >> thanks. bye-bye. >> 3% of the portfolio. >> she didn't go there to manage 3% of their portfolio. >> exactly. >> that's going to grow. you know that. >> we have about 15 minutes, a little more left to go to the closing bell. one of the strongest sessions of the dow for the year, up 238 points with similar gains across the nasdaq and s&p today. disney and dish calling a

truce in their distribution war, but their peace pact could reverberate through the industry. and we'll get more reaction on what's happening in ukraine and how energy is playing a huge part of this whole mess. the ceo of toe tal s.a. will be joining us tommicoming up after. joining us coming up after this.

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welcome back. a triple rebound today. first across the major indexes, also we've got higher yields on the ten-year benchmark treasury note. we've also got a little bit higher dollar as the risk on sentiment pervades. the dow heading into the final stretch up 237 points. >> not a bad 48 hours for the walt disney company. sunday night won an academy award for "frozen" for best animated feature. today it's the best performing stock inside the dow. >> probably the latter development that has more to do with a ground breaking they say new deal with the dish network. jon fortt joins us with the details. jon? >> yeah, kelly. this deal between dish and disney is big mainly because it could allow dish network to do something a lot of other tech giants have tried in vain to pull off. create an internet based tv

subscription. important to note dish hasn't actually launched a service like this but it's now got one of the key pieces of the puzzle it would need in order to pull that off. dish and disney didn't talk about the financial terms but disney's ann sweeney called it one of the most comprehensive disney has ever undertaken. on dish's side the company agreed to bust the kneecaps of its hopper dvr that allows viewers to fast forward through commercials. it sure looks like some interesting content deals could be in the offing for 2014, guys. >> sort of undercuts the technology in that regard. thanks, jon. see you later. >> and we're not frozen on markets. 226 points on the dow. the s&p 500 looks to be aiming to make another record close, bill. i think that would be the fourth or fifth one of the year.

we should mention, health care, there's just no stopping it. we talked earlier how it's up 430% from the lows. it's up 8% year-to-date. one of four or five sectors at this point that is in the green. >> she's pounding the table over that the one. was that a pun i heard you sa sni. >> perhaps? >> coming up, an exclusive interview with sylvia mathews burwell. it's coming up in a moment. stay tuned.

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eight minutes left. starting to lose a little altitude but let's not quibble. it's still a powerful rally today. the dow up 228 points right now. the s&p looks like we will get a record close there. we have -- the bar to exceed on a closing basis is 1,859, the number hit last friday. we're up to 1,874 right now. joining us, rich, the principle of treasury partners at high tower. so which market do we believe? yesterday's sell-off, today's rally? which one is for real? >> i think since the start of the year we've had tremendous divergence between the stock and bond market. we've had weather-related weakness that's caused depress

retail sales, employment gains, industrial production, housing starts. but the stock market continues to push through that weakness. we've had the turmoil in ukraine and bonds have risen and yields have come down. >> right. and you think that will continue? >> no. we think we have to look at the structural improvement in the economy, so fed is going to continue to taper. we have escape velocity in the economy. we'll continue to get jobs growth, and we will see a higher stock market at year end and higher bond yields. >> what are your top picks? >> we like technology, financials. on the bond side we want to take more credit risk, increasing cash flows, improving bond prices. in terms of a credit perspective, but we don't want to take duration risk. >> you like the financials as the yield curve presumably steepens. why technology?

>> we think it's an undervalued sector. when you look at it on a pe basis, on a free earnings growth basis, technology is an attractive sector. >> most of that is old tech, right? >> pretty much. we really don't do a lot with the new -- >> the newer names. >> facebook and twitter? >> 2000 to 2002 -- >> thrice shy in that case. >> thanks for joining us. we'll take a break and come back a closing countdown. if the dow is up more than 198 points, it will be the best day of the year so far and we'll find out if we can do that coming up after this.

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from td ameritrade. three minutes left in the trading day on this rally day. show you, let's relive the last two days. here is yesterday's sell-off with all the tensions between russia and ukraine. tensions ease, rally day. so we've come back quite a bit. we're up 1.3%, and, in fact, the dow -- of the three major averages, it's the worst performer today percentagewise. nasdaq is the better. remember yesterday, if it was up, it's down today. so bond prices going down, yields going back up almost to 2.70%. price of gold down $15 or 1%, and the volatility index which was up 16% yesterday down 12% today. terry dolan, what do you expect to happen here?

do you buy yesterday's sell-off? do you sell today's rally? what are you doing here? >> hopefully you did both. >> easier said -- yes, hindsight is always the easy thing to do, right? >> i would think that the telltale will see if there's any follow through going into tomorrow, and whether or not the rally has more legs. >> you're going to watch the open closely tomorrow. >> i think we are. i also think my real comment is we're bound to the top end of the trading range which we're forming around 16,550. i think within the next 150 points the dow will take a second look and get choppy before we move forward. i think it's important to build some base before we move forward. >> the s&p is at aun all-time high. and the dow is 150 points away from its previous all-time high. you want to see it get back there and then you think we will start topping out. >> either you will see the momentum take it through for a breakout or see it come up to the top end and start to yawn a little bit and come back in and then you will see consecutive trading days in which you start

to trading down, choppy patterns, where it moves down to the mid to lower trading range we just formed. >> we've had other geopolitically cease in the not too distant future in venezuela, in syria, name your spot, and the markets yawned. why did we sell off yesterday do you think? why was that one important necessarily? do you think about the why in this case? >> i think because of the way the russian markets and the related currencies sell off at that point yesterday, that that was the panic. when they saw the markets take a tumble. they saw the currencies getting crushed. that was the market responding to that. and then taking a second look, but i think the market all along knew it was a relatively benign situation from the standpoint of action. there wasn't much that the u.s. could do except for maybe try sanctions and try other things and the market knew that. if the market didn't think that, we would have been down 1,000. >> yeah. thanks, terry. >> plesh smasurpleasure. >> now what we wait for is the

jobs number on friday. in the meantime, we will watch for that open tomorrow morning to see if there is any follow through to this big rally today. stay tuned. an all-star panel coming up on the second hour of "the closing bell" with kelly evans and company. i'm see you tomorrow, kelly. thank you, bill. and welcome to "the closing bell" hour two. i'm kelly evans, and what a close we have here. the s&p 500 hitting another record high. worst case fears about the ukraine crisis receding for now. we emphasize for now. here is how we're finishing up. look at the dow jones industrial average. it only had to close up 198 points to get its best day of the year and it's adding 224 as we enter the close. up 1.4%. just below that 16,400 level. look at the nasdaq up almost 1.8% 1.8%. the s&p 500 up 28 points closing at 1,873.

that is a new closing high for that index and wait until we talk to you about the russell. let's get to it with today's panel. joining me dani hughes, marcus lemonis kate kelly and kevin o'leary. we've got "fast money" trader brian kelly, so the trio of the kellys returns. great to see all of you. kate, i want to start with you and talk about the fact that despite the major indexes having a strong day, the small caps, the russell 2000 i think just had their best day until the end of 2011. >> i just hung up with a hedge fund trader who said the russell move blew his mind. it was a crash to the upside. his theory is, you know, people were concerned about ukraine obviously. they weren't sure whether to go all in in terms of being long so they were using a long position in the russell perhaps as a hedge and they went all in today when the geopolitical issues standarded to recede a little bit. he thought this was a remarkable move. he also said, you know, this market is looking volatile to me. i think overall it's going to be strong but what's going to

happen day to day, there's no telling. in terms of the jobs number friday, if i knew what it was, i'm not sure i could trade it accurately lly which i think sa lot. >> crashing to the upside. can i quote josh brown who just tweeted stock celebrate mardi gras by ripping their top off. >> exactly. this volatility has been really phenomenal over the past couple weeks. you know, who isn't it helping? it's helping brokerage firms. trading profiting will be great for first quarter. it's helping asset managers. everybody wants to see what's your advice? the big guys are coming back. also it's really helping u.s. stocks in general, that flight to safety. health care is a good defensive name. then you've got gold and treasuryintres treasuries benefiting. this is a big opportunity because you see two real huge themes that have been going on and on over the last couple years. buybacks and dividends.

dividends, we've seen that the biggest dividend payers in the s&p 500 in 17 years, and let's face it, we can only really remember the last two quarters. so we paid out -- >> the ratio -- >> the ratio is huge. >> it's huge but it's still low by historical standards which means it might have room to grow. marcus, kevin, some perspective. are we way too jubilant? >> for me, no. what i saw in the transports with delta, retail with jcpenney, that tells us things at home are getting better. >> maybe people are going to move more capital here. what do you think, kevin? >> i think what we're looking at now every day that goes by, we start to ask ourselves, the s&p, will it hit its earnings targets? i think the answer is yes. even putin's moves in the crimea, does it change s&p earnings? unless it's all-out war, i don't think people think that's going to happen, he just wants a warm place to go in the winter, why shouldn't he take it over? while he's doing that, let mi

companies make money and the s&p will charge forward like it's doing. >> brian kelly, what was so interesting is people have dug into this whole situation to look at the companies that have exposure to russia. they've been hard pressed to find a lot of them because russia is a fairly isolated country economically speaking. >> yeah, absolutely. and really what you had to look at during this crisis, and i'm not really in the camp that this is necessarily over. we've had one good day, but the point being is that when you look at this, you have to look at collateral damage. i'm looking at oil. see what oil does. that could be an issue or it could be a positive. you look at the swiss franc. if switzerland has to do something with their currency. you look at china, how does it impact china or does an oil spike impact the japanese yen trader or the japanese stock market or japanese economy. you can't just look at russia. the russell is somewhat isolated. that's probably why you saw the strength in it. most of the smaller companies get their revenues from the

u.s., really not affected by geopolitics. >> in terms of the initial market reaction to what happened in the ukraine and the sort of bounce back, i'm reminded a little bit of the argentina and emerging markets issues we were discussing four to six weeks ago. it seems very frightening at the time and you wonder about the domino effect, the currency effect, and so on. actually maybe these issues are idiosyncratic. you talked about the ice laying of the russian countries. david costen often has a smart take on thing. i heard some commentary from him to the effect this really is going to have a pretty blunted macro impact in his view. >> i want to bring in kenny fresh off the floor. what jumps out to you about the activity? >> i felt like this knee-jerk reaction. not on a whole lot of volume, no real change in mindset of the large asset manager after yesterday's drubbing. we went right down to 1835. it found support, the real natural buyers. when nothing happened overnight they took it right up. more so it feels like it was the

automation, it was the algorithms, the momentum play they're took it up and through. now they have 1900 on their sights. it wants to go there no matter what happens, no matter whether that is good, bad, or indifferent. we got negative data out of europe, mixed data out of the states. we continue to get mixed data out of the states and they take the market to new highs. i understand the market is going to do better in 2014. it's the safe haven play, america, america. i get all that but i think the market is well ahead of itself and i would be very, very caution chasing a short covering rally on no volume. >> by the way, it's the 57th anniversary or birthday of the s&p 500 index in its present form. that was march 4th, 1957. it's also soon to be the fifth year anniversary of the lows. remember, we closed at 676 on the s&p 500. mentioned this last hour, but we're up so strongly since then, almost 175%, led by health care, by consumer discretionary, led by financials. danny, what do you invest in now

for the next five years? >> i like industrials and energy. i truly like where we're actually spending money on real productive assets. manufacturing is one good example. nissan saying they are going to put a plant together right outside of nashville. that's real productive assets. that's jobs. that's something that long-term is going to be growth. so that's where we like to look long-term. >> brian, what about you as you take stock? you heard what kenny said. he described it as short covering where people are concerned about the nature that kate earlier was say being how we almost crashed higher. so how do you sort through this and try to figure out what fair value is? >> well, i'll tell what you, my first reaction when i heard everybody be so excited about the market here, the trader in me just said sold to you. i want to short this thing. that was my natural reaction. >> hello! right. >> what is the difference between a crash up and a melt up? i'm not quite sure. >> you've got me. i think a crash up would mean people are panicked into this.

the one thing you have to worry about is people are saying, i don't want to miss this. is this a repeat of 2013. >> a crash up is when they jump in and it's like you can feel it's panic buying like they don't want to miss it. a melt up is a slower move higher. >> and a it's the machines, too. we can't discount the robots just flying off everybody else's orders. >> which is infuriating for people that watch the market. they say why is this happening? it's really happening -- it's automated, driven by algorithms. >> i was just going to ask, too, when we talk about the nature of this activity, whether it's short covering, whether it's algorithmically driven, at what point are the macro bears -- do you feel this is almost a day of capitulation where they say, you know what? we're throwing in the towel and going long? >> it doesn't feel like that yet because there wasn't that accompanying volume. if you have the guys that were

throwing in the towel, you would have seen more volume on the upside. what confuses me or concerns me about this is that you're not seeing the real volume, the real commitment. you're seeing natural sellers just saying if you want them, come and get them. they're raising their offers, and raising their offers and the automated system keeps coming in and taking it not on a lot of volume. >> what i'm really impressed with is i think the valuations make some sense to me. i'm looking at the earnings and their balance sheets and they're a lot better than they were a few years ago. while we're contemplating the height of the market, i really want to look at the height of the earnings and the height of the balance sheets and see if there's a correlation. >> but what have easternings rey done? >> well, they've done all right. >> the earnings have been good. >> they've been good because they've been doing nothing but cutting -- she haven't been growing top line revenue. >> and loy the cash hoarding. >> if we can sustain concerns about invasions in europe, maybe it's time to expand the pe on the s&p and the dow because we've gone through a heck of a

cycle and we used to trade at 23 times. we're nowhere near that now. so maybe what you're seeing is the beginning in this calendar year, 2014, of another turn in the market. maybe we increase the pe by 1% to 2%. >> you say 23 times, i'm thinking wasn't that the height of the dotcom bubble. >> look at the nasdaq,s over 4,000. you remember the height of the dotcom bubble was 5,000. now we have real earnings. stop your whining. we have real cash flow. >> brian, what do you think about the valuation here? >> the one valuation metric that i always look at is warren buffe buffett's favorite. it's total market cap to gdp. we're at 120% almost at this point in time and that shows its significantly overvalued. that doesn't mean we have to go down. things can be overvalued for years at a time but i'm just saying, it's overvalued. >> right. >> warren himself has put it as fair value here.

we just heard a lot from him yesterday. he's not out there saying the market is overvalued. >> they're still writing checks. >> exactly. he's putting his mouth where those views are. he's showing they still see value. >> i think it is an important point, kelly, actually. the buffett point you just reiterated. i think a lot of people feel we're at fair valuation. the question is where do we go from here? will there be a little more froth. there's been more volatility, but is there much more reason for optimism and how large is the premium? it seems that's what the market is wrestling with. >> i think you will see that this month if the fed cuts once again, you're going to see how the market really reacts. is it strong enough? do investors really think the market can hold its own? that will be the next test. >> we'll see -- >> the only ammunition the bears have is the long bond is under a three handle. that does worry me. it's strange to have that situation. these bond markets should be showing the economic strength underpinning. it should be trading over 3 and it isn't yet. >> and it isn't. >> we'll see what the jobs

number is but is there any real reason to think the fed is going to halt their tapering? >> not at all. if the job number comes in weak on friday, you know what they will do? they will dismiss it. they will say cold weather, ignore it, it's getting better and that's where it's going to go. >> we'll watch the 30-year for some direction. kenny and brian, really appreciate it. stick around and catch brian and the rest of the "fast money" crew coming up at 5:00 p.m. that's just about an hour ahead. we've got much more on the markets here, too. the powerful rally today. we'll speak with a top wall street bank analyst dick bove. will there be a follow through rally tomorrow? wait until you hear what i thinks about the financials. and also coming up controversial tax hikes. if the president has his way. we'll here from the us a of management and budget. find out if your wallet will take a hit. you're watching cnbc, first in business worldwide.

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welcome back. investors clearly jumping back into stocks today as ukraine concerns have eased a bit. we want to focus as well on some of the performers we're seeing in the banks. dick bove joins us now to weigh in. it is great to see you, dick. >> thank you. >> i wonder how much further you

think as we approach the fifth year anniversary of the market bottom in 2009 we could go from there especially for the banks you do cover? >> in january 2011 we wrote a report saying that the new golden age in banking had begun, and basically we have not had any down quarters other than one in that whole period, which is now about three years. and bank earnings are at all-time records that the industry has never seen before. at the same time that we've seen this, you know, move to record earnings in banking companies, you know, we have not seen the same move in the stocks. in other words, the valuation of banks as it relates to book is about 20% to 30% premiums. if we're going to get what mr. bernanke said yesterday which is 3% growth in the economy, these stocks should go to 2 to 2.5 times book. in my view you still have 100% move ahead of you in bank stocks, and i think they should be bought. >> wow, a doubling from here. just so people know when you were referring to ben bernanke

there, you the now former fed chairman is on speaking gigs. he was in abu dhabi. he said he expected growth to be strong. i want to bring the panel in in a second but when you say the bank shares could go up 100% from here do you mean pretty much across the board? >> yeah. in other words, basically if you're looking at the banking industry as if it was manufacturing and you think of the bank balance sheet as basically a factory, the industry is operating at 65% of capacity. if the economy is going to grow at the rate that mr. bernanke, myself, and others believe, then it will ultimately get to 85% to 90% of capacity. it will drive earnings much higher than they are at the present time and it will get the stocks up to 2.25 to 2.5 book levels. >> dani, what do you guys think? do you agree this is the golden era of banking? >> if that's true, it represents

around 20% of the s&p. it will haul up the other 80%. that may be a very good investment thesis and it's hard to fault it because i think he's right. if we can get these quarters ahead of us that are going to be more than north of 3% gdp growth, the rest of the economy will also have earnings growth. that's a bullish signal for the entire market. >> that's not it, kevin. you have to think, too, this volatility is affecting banks traumatically. they all have trading desks and the trading desks have been benefiting tremendously over the past couple months from this volatility. dick, maybe you agree, that a lot of that income will come from the trading side, and we haven't seen that in many years. >> well, that's -- go ahead, dick. >> for the big companies you're exactly right, but for the bulk of the industry, for roughly about 99% of the banks out there, it's going to be an increase in loan volume, and it's going to be an increase in margins. so you're going to sell more widgets at higher margins and that's where the earnings are going to come from. obviously for goldman sachs, morgan stanley, jpmorgan, that's

where the trading comes in, although this quarter was not the greatest quarter for trading that we have seen. but basically the core bank is going to get it because they're going to have more loans and the margins on those loans are going to be higher. >> well, just to play devil's advocate for one second, it's definitely true a trading desk benefits traditionally from volume and volatility, and we're finally seeing a little bit of both, but at the same time that's such an aggressive thesis, dick. i don't know. it seems like with higher capital requirements, more regulatory concerns, the banks are kind of getting leaner. it seems to me like it could be a multiyear process to figure out what's working and really grow that revenue. i do know they're divesting themselves of some noncore assets. i don't know. i mean, do you really think it's going to be that robust and over what period? >> here is what i see. i see a much more aggressive abl cash flow lending coming out of

the banking community and we talk about your margins being enhanced. i think it's the opposite. it's a more competitive environment. borrowers can demand better rates and lower fees. if the earnings are going to come out of volume or margin. i think it's going to come out of volume instead of margin. >> last word, dick? >> i think basically take trading off the table and go back to basically what is bank does. loans will go up meaningfully in an economic recovery number one, and, number two, if interest rates go up as loans go up, you will see an expansion in margin at the same time. >> dick bove, great to get your perspective this afternoon. appreciate it, sir. >> thank you. now, total is one of the biggest oil companies in the world. i will speak with its ceo next about the crisis in ukraine. plus, we'll get his take, yes, on the keystone pipeline and america's push to become more energy independent. also, what's fueling the big jump in auto prices. phil lebeau is checking under the hood on record high auto

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in a we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. welcome back. cnbc is live all day today from ihs energy sierra week in houston, texas. what a week to be there amid the crisis in ukraine that sent prices higher yesterday. we're drilling into how it's really impacting the oil markets and sharon epperson is there with an exclusive interview with

christophe de margerie. >> this has been a big topic of discussion, the situation in ukraine and russian tensions with the west. what that means for businesses that have significant interests in russia is going to be key, and christophe de margerie, the ceo of total, much to say about what total's business operations will be like in russia, in western siberia, mainly the natural gas project you have going on. what impact do you think this might have on that project? >> you know, as much of the project we are pursuing, it's a long-term project. we just decided to launch it. it will start producing if everything goes well by 2018, so four years more to come, and then we will see. so, yes, of course, i mean, what's happening is having an impact in terms of tension between countries and we cannot say we like it, but at the same time as a company, as a long-term investor in russia, we

don't see it will have an impact. what we need to do is continuing our business representing our code of conduct and definitely look at the longer term which is having access to gas for more -- many people in the world. that's our job. >> so you will still maintain, of course, this long-standing investment that you have in siberia that is 60% owned by a russian firm as well. at the same time to ensure the competitiveness in the eu, you are looking into shale gas in the uk, the first company to do so in that area. is this part of the reason that you're doing this to underscore the competitiveness that you want the eu to have in light of geopolitical situations like this? >> you know, it's just l & g export of gas, it's one part of our business. the other one is unconventional development like shale glass in the uk. in europe you cannot develop those activities in all

countries. you cannot do it in france. in uk you can. total in the uk is the first producer of oil and gas. we're the first producer in the north sea. so to have a continuity in operation at a time when you can start to see the decline of gas production in the uk, that's normal for total. we were asked by the government to come and help them to develop those not risky but unconventional gas which means difficulty in terms of its accessibility, difficulty in terms of cost control, but that's our skill and we participate as one of the oldest investors in the uk. >> kelly? >> sharon, thanks. christophe, it's been said with regard to russia that the tool with which to intimidate europe is the valve on a natural gas pipeline. what is your company doing to try to offset that? >> you mean which pipeline? >> the natural gas pipeline. what is your company doing to try to reduce europe's reliance

on russia for its energy, specifically it's natural gas? >> okay. you know, we are not in any pipe -- gas activities between russia and europe. we avoid it. by the way, it's a monopoly of gas, the national gas company. that's why total is involved in l & g because in l & g you export the gas with ships, what we all icebreaker ships to avoid to be i would say taken in these fights on what kind of gas at what price. that's not our business. we are selling our gas outside of russia. we are selling it to the asian market and to the european market but without pipes. >> and i wanted to focus your attention now, christophe, for one moment on iran. iran has asked that you among other companies consider coming back into iran after sanctions are lifted. what is your situation there now? have you seen some of the new business terms that have been introduced by the iran oil

minister? they said they want a new business model to entice companies to come. is it something that you're considering? >> we always are considering new opportunities when they are clear and legal. today there is an embargo and the embargo is very clear. no negotiation until the embargo is lifted. if the embargo is lifted even on what we call the interim period, then we might start discussing, but we will not invest, we will not negotiate new terms until we can do it, and then we'll have to see if the terms are compatible with what we intend to get from any investment in the world. it's a competitive industry. what we need to get the return on our investment, that's what we need to do with our shareholders. for the time being it's just an opportunity and today it is in the hands of politicians. >> understood. thank you so much for joining us here. christophe de margerie, one of the key guests here from total

at the conference in houston. i'll have more to come. back to you. >> and sharon, it's been great stuff all day. really appreciate your time and christo christophe's this afternoon. auto loans are red hot but wait until you hear how much american consumers are borrowing and spending for new wheels. phil lebeau has the staggering details and what's really interesting is what we're putting in our cars that's driving the price ever higher. and buckle up for the next big battle in washington. budget director sylvia mathews burwell speaks to us. you won't see her anywhere else today. keep it right here. cnbc returns right after this. there's this kid. coach calls her a team player. she's kind of special. she makes the whole team better. he's the kind of player that puts the puck, horsehide, bullet. right where it needs to be. coach calls it logistics. he's a great passer. dependable. a winning team has to have one. somebody you can count on. somebody like my dad. this is my dad. somebody like my mom. my grandfather. i'm very pround of him.

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welcome back. new fourth quarter data on auto sales shows we're breaking all sorts of records on auto loan from how high the payments are to how long the payments are. six years. help me out, phil lebeau. walk us through the numbers. what's going on? >> two that you really need to pay attention to, kelly. first of all, we are seeing a record amount in terms of the average auto loan. it's now averaging $27,430. that was at the end of last year. that's an all-time high up $739 compared to the same period the

year before. the other number you need to pay attention to, the length of the loans. six and seven-year loans, one out of every five auto loans is now written for that length, and that's what we're seeing here. people want to stretch out their loans further, and this brings up a lot of questions about whether or not people are biting off a little more than they can chew in terms of how much they're borrowing and whether or not they're going to be under water four or five years down the road well before the loan is paid off. >> and, phil, stay right there because i want to bring the panel in and get some perspective. marcus, what do you make of it? >> there's a number of things driving this. number one, the mix has changed. i don't mean from domestic to luxury. but in terms of how many people are buying new versus used. the other things that's changed is the amount of down payments people are providing. in the downturn we were seeing 10% and 20% down now we're become to 0% down. we have auto manufacturers subsidizing rates which is allowing people to buy more car which is what's putting that on their own personal balance

sheet. that's a big problem. >> i tell you what's troubling about the numbers is they are no longer linking the lease to the warranty. what happens, it's like buying a building, 36 months later when your warranty runs out on your drive train not only are you paying off the interest on your loan, you're paying for a new set of equipment every time your car blows up. that's where you really get killed in this strategy. >> it's not like you have some personal experience. >> you need to buy one of my warranties. >> i lease everything but i make sure i tie my lease -- as soon as the warranty is over i drive the car back. it's a utility, it's a commodity, but this is where i think the unintended consequences of keeping rates artificially low -- i let the fed wear this one. >> i think it's aspirational as well. people are aspirationally buying cars that perhaps they can't afford right now but they're feeling good about the markets, about their earning potential so they're kind of trading up -- >> guys -- >> yeah.

>> tit's not just aspirational. if you look at all vehicles, the price has gone up. what's happening here, marcus talked about the mix changing, it's also changing in the type of vehicle we see people buying. suvs and pickups are a greater proportion of overall sales. it's hard to find one under $30,000, especially when you're talking about suvs, and people increasingly want to pay for the in care connectivity, infotainment systems. a lot of times they haven't bought a new car in seven or eight years. so they look at this and say got to have it. got to be connected on the road. >> there's one other thing i think also drove it, during the downturn, the number of new vehicles sold in this country dropped dramatically. so the balance on the credit report also dropped. as the credit picked back up, people reset those levels. >> if i can just draw one parallel to what's happening in the stock market right here. this is actually an interesting case, right? because what you have, and, phil, correct me if i'm wrong, a lot ever these auto loans are being packaged and securitized. so there's huge demand for this product in the credit markets

which are starved for other kinds of products that are going away. it's making it easier for people to get credit and they're able to buy that car and support the price. it's not dissim nar from other moves we've seen in the past. at what point do we get worried this has gone too for? >> nobody believes we're at the tipping point yet, but remember in the past when we've seen a big surge in people being under water on their loans, we didn't know we were at the tipping point until we were there. we do know that the most recent data when it comes to repossessions and delinquency rates, they're well below where they were in 2007 and 2008. but when is that tipping point? it's just guess is as good as anyone. >> i think it's 36 months away. >> which makes me question the broader circumstances in that case. kevin, quick question for you as well. when someone buys a house, ignore the latest -- the last cycle, but at least it's traditional an appreciating asset. when they buy a car it is from the moment of purchase a depreciating one. does that make it very different

for people to be this exposed in terms of their credit to autos instead of to housing. >> it's a good point. there's no question that a car is worth 30% less the minute you drive it off the lot, but you elect to do that, you've made the decision across the 36 months. you should own it for. i believe in a lease program where you borrow money to actually use a vehicle because that's all it is. it's a transportation utility. you should never own it for one day over the warranty because all of a sudden the capital expenditures, you have no idea what they're going to be based on what happens to the car as you drive it. a house is also not a good thing to buy today. i think housing will go flat as soon as we break the three handle on the ten-year bond. i'm telling you, this is all about the fed keeping rates low. >> on the housing front rates are still historically low. people have bought houses into much higher interest rate environments. you're still getting a relatively good deal on the financing side, aren't you? >> phil, do you want to give us the last word in terms of autos? >> sure. the final word, and i think you guys hit on it, leasing is red

hot right now in part because of what we're seeing with the interest rates. the lease penetration levels have never been higher. people are saying i want to keep that monthly payment low. there's a lease deal there. if i can get it for $349, i will take it. >> lease payments are high because the manufacturers are subsidizing the residuals. that's why they're as hot as they are. it's not a consumer driven thing. i agree with kevin that we want to keep the term right but the trade cycle is about 30 months and that's why i point out to 36. >> guys, thanks. interesting stuff. absolutely one to watch. we've had some big movers in the after hours session. stick around also for the cnbc.com hot list. that's straight ahead and the president's budget director speaking with our own steve liesman exclusively. they will get into the president's budget proposal call ari calling for the rich to pay more. the details right after this.

welcome back. green arrows returning big time to wall street. seema moody walk us through the movers. >> we're going to begin with bob evans farms moving lower after they posted weaker than expected third quarter revenue. stock down 5% after hours. a different story for smith & wesson. the gunmaker posting third quarter earnings and revenue after the bell that beat the street. it also gave fourth quarter earnings guidance above street views. you can see that stock up better than 5% after hours. now, in the regular session, continental resources was higher

today. a judge presiding over the divorce case of oil man harold ham and his wife has ruled the billionaire founder will not have to give up his controlling interest as part of any settlement. fuel cell makers moving higher on news tesla was expanding in europe which included expanding its super charger network on the continent. chevron gaining ground as well. a federal judge blocked u.s. courts from being used to collect $9 billion ecuadorian judgment against the oil company for rainforest damage saying the award was obtained through fraud. that's a wrap. kelly, back to you. >> seema mody, thanks very much. a flurry of action. allen wastler is keeping an eye on all of it for us. >> kelly, how is it going? >> great. >> budget has been a big thing for us today. we've had lots of budget coverage of obama's proposals but the one that's kicking it for us, former senator alan simpson says if we don't start dealing with not the short term but the long term budget

problems, the u.s. will be sucking on canal water soon. serious suggest, but he talks about it in such a folksy way and our readers are eating it up. this thing has chalked up about 30 grand so far and it's just more and more getting into it. i urge everyone check it out. it's a great read. now, number two is sort of balancing out the negativity from mr. simpson, we have jeremy segal that everybody knows. he's a permeable and he was still being bullish today. our futures now folks talked to him and he sees dow 18,000 coming up. in fact, he says if you looked at it like a baseball game, we're only in the fourth inning of the bull market. so apparently our readers are looking for good news because they're diving into that one, too. >> i was going to ask if harry dent is getting any traction? >> he was on fire this morning. absolutely kicking it this morning. but after about lunchtime, it sort of faded. finally robert frank weighed in. you know, he's always coming in, he was writing about billionaires again which he often does which is a big

attraction for our readers. but this time he took a look at the forbes rich list and the who run rich list. the who run rich list has 358 chinese billionaires while the forbes rich list only has 152 chinese billionaires. so robert started examining how each list counts and that who run is sort of backed by some chinese interests. >> shocking. >> maybe that's the difference. you have china, you have billionaire, that's something a cnbc reader loves to read about. it's all right there for you. that's our "hot list." >> thank you so much, sir. >> take care, kelly. >> alan wastler. if the president has his way many cnbc viewers could be hit with higher tax bills. up next, sylvia mathews burwell onned president's 2015 budget. you can find out how much your bottom line could be affected in just a moment.

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welcome back. we talked earlier about how strong a rally we've seen in markets today and some context now for the rally that, in fact, we've had over the past month courtesy of our own giovanni. the russell 2000 is up 10.5% from the lows we saw on february 3rd. the midcaps up almost 10%.

the nasdaq is up better than 8%. the s&p 500 7.5%. my point being your source's point about how this was almost a crash up, you could he cexten that not just to the action today but what's happened over the past month. >> it's very interesting. i guess the russell is one way people are looking to play the long side here. perhaps they see it as less risk because year dealing with small stocks and it's a nice way to stay centered. >> u.s. focused as well. >> exactly, exactly. so i think he was onto something there, but i think people will be looking for lots of ways to ride out the volatility whether it's that or the vix. >> fascinating day. thank you. the president unveiling his 2015 budget proposal. it always for eliminating some tax breaks for upper income americans. steve liesman sat down exclusively with the head of the office of management and budget just a few minutes ago. steve, what did you learn? >> yeah, kelly, interesting conversation i had with sylvia burwell who spent time in the clinton treasury, the clinton white house, went to the bill and melinda gates foundation,

and then came right back here. this is her first budget. we began by talking about the major policy thrust inside this budget. >> what we believe is in order to get the economy growing at the maximum that we can, we need to put in place certain policies. whether that's doing things like focusing on the long-term unemployed, which are efforts that can help with our growth rates in the year, or doing things like immigration which we all know will contribute to economic growth, or doing things like corporate tax reform which we believe by broadening the base and lowering the rates you can help focus on economic growth. >> it didn't seem like it took very long until republicans started tweeting out that this is dead on arrival. i know you worked on this for a long time. does it feel like this thing is dead on arrival. you do all this work and it's like handing in a paper and your professor says you failed already. what is that like and what do you think of the idea of getting these proposals actually through? >> i think there are a couple things the president's budget is aimed at doing in terms of the

impact it's going to deliver, and the first one is in terms of showing the vision of where we think the country should go and where the president thinks the country should go. the right fiscal policies to align with what he said in the state of the union. i think you're seeing a what wi the state of the union. you're seeing an issue with that. the second thing is influencing the things that are happening here in washington, d.c., with regard to the budget. and the president has put together what he believes are the important priorities within tight budget numbers in fiscal year '15. >> there's stuff that you guys like in there and they like. you said some things were proposed by republicans. is it a better place than you were a year ago on budgets? >> what i think is, there has been some progress made. if we just take a year in review. so, a year in review, in terms of deficit reductions. when the budget came out last year, it was predicted $1.1 trillion. it was 680 in the end.

about a $400 billion deficit reduction from 2012 to 2013. then, we have a situation where i think hopefully we've broken the fever on the issues of having conversations about default. >> money that's overseas. are there efforts to bring money overseas permanently back to the states? >> it depends on how one is talking about that. we want to create a system that is clear and that is helpful for our companies to know what they're doing, how they're doing. and not discourage investments from coming back and finances from coming back to the u.s. >> tell me about going from bettenville, arkansas, in the private sector, back to the government. >> walmart is an institution of execution. that is what it is certainly known for. and fortunate to spend time and to be there. coming back to the federal government, certainly, as you reflected, one has to work and work on both sides of the aisle.

i go up and down the avenue a lot. i spend a lot of time working with members of the hill and making sure that we have open lines and are working well with them. >> now, the fights begin, kelly. white house has no expectation. it gets all of what's in this budget. the question is, can it get some of it and what does it have to give? and are republicans getting a piece of what they want? >> steve, thank you so much. we'll see if anything changes this time around. now, for something completely different. are robots for kids the next thing? the founder of play-i will join us. is it cool or too soon for the tykes? we'll be right back. e out there. you can't always see them. but it's our job to find them. the answers. the solutions. the innovations. all waiting to help us build something better. something more amazing. a safer, cleaner, brighter future.

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welcome back. kicking off a new feature today, where we look at people and companies that are off wall street's beaten path. and we begin with robots. not just any robots. these machines will lead children into the mysterious world of creating computer programs. otherwise referred to as the future. with more on the robots and the company behind them, joining me

is saurabh gupta. welcome to the program. this is to trick kids into learning coding, is it not? >> that's the idea. our goal is to keach kids as young as 5 the concept of programming. and they play with the robots on platforms like an ipad. as they play, they learn the concepts of programming. >> i want to bring the panel in. we just showed a bit of the video what it looks like for kids. we're not talking about programming and technical english language. we're talking about touchscreen applications for them to connect what's in front of them on the screen to the movements the robots are making. is that correct? >> exactly. we believe in teaching kids the concept of thinking. it's a different way of thinking of approaching problems. it's something that is useful for every kid, no matter what profession they pick. >> and, guys, you know, especially those of you who have

kids. what do you think of the concept of exposing them to this kind of technology? >> i'm curious as the mom of a 4-year-old to 2 1/2-year-old, how much of a beating can these toys take? >> that's a great question. we know these are designed for kids as young as 5. we know kids at that age, they throw the toys, they step on them. these are being designed keeping kids in mind. >> can i ask you about the potential of these products to advance math scores? i spent a career in the educational software business. and also trying to use firmware, with software to advance reading and math scores. is there any evidence that these toys between the ages of 5 and 8 years old, can advance a math score on a tested basis in a school? >> that's a question we have been asked for. our focus as a company is on programming. that's what our applications are for. one thing we have done, we have opened the toys up to developers. and there are developers who are building applications to teach

math and teach physics. i don't have any evidence for that. but a lot of people believe in that. and i believe you will see a lot of these. >> let me ask you a question. i notice you close on a crowd-funding round for 1.4 in a series for about 8 million. i hope you don't mind me asking, but how much of your own money have you put into this business? >> we put seed money into the company. we were able to raise $1 million from companies like metrona and google. and it's been easy since then. >> you are personally vested in this product, as well? >> yes. >> how much is the product? >> so, we are selling these robots $169. and $69. and they are a little more about them. there's a song, as well, that helps to -- that helps the kids learn. can we play that for a second? take a listen. >> definitely.

>> here's a song playing the ninth symphony. ♪ >> wow. real quick, how is it -- what was the programming that went into it? >> it's actually really simple. it starts with something very simple. you teach him how to play a single note. then, as you advance further, as you go to different levels, you learn concepts like routines and loops. eventually, you get to a point where you can play any song you want. >> what is that song? are the robots discussing the performance? >> we made these robots to be expressive. when you do something nice, they're happy. when you make a mistake, they encourage you in different ways. >> thank you for joining us. keep us posted on how the products.

i know the first round sold out. if this spurs in the company and the technology. that was saurabh gupta. thanks to the panel. kevin o'leary is on "shark tank." and you can catch "the profit" at 10:00 p.m. eastern. now, it's time for "fast money." >> thanks. "fast money" starts right now. we start with breaking news on u.s. stocks and today's record rally. investors breathing a sigh of relief, as tensions between russia and ukraine appear to ease. the s&p closing at an all-time high. the s&p and the dow having their best day of the year. the nasdaq closing at a 14-year high. and the russell 2000 seeing their biggest jump. tim seymour, brian kelly, josh brown and pete najarian. so, it's like it never happened. josh brown. what happened to this? >> ukraine is a huge trading partner withhe