we are seeing the s&p 500 with a record intraday all-time high. the nasdaq also setting a high. most of the sectors have of arrows. technology is the one lagging sector. pc sales have dropped dramatically. with that, we see names under pressure. let's take a look at disney, home depot, procter and gamble, all-time highs. the traders on wall street still say the momentum remains to the upside. the vix, the fear index, has moved from the read the green. the dollar is lower. back to you. lori: thank you so much, nicole. melissa: turning to some other movers. microsoft hit with several

downgrades. pc sales plunged in the first quarter. adam shapiro is here with the details. >> everyone is talking about whether or not pcs are dead. an analyst that i am talking about is saying no. let's start with goldman sachs. they downgraded microsoft from a hold to a cell. they have lowered the price target for microsoft from dirty dollars down to $27. here is why goldman sachs may get it wrong. they say with the recent upgrade cycle, we expect the windows operating system revenue can still increase. morningstar has a price target of $35 on microsoft. they will lower the licensing fees. also, microsoft cannot count them out.

you have intel coming up with a chip that they will unveil this summer which will save something like 30% of battery life which will help notebooks, as well as tablets. at the end of the day, people are not giving up pcs, they are delaying replacement of pcs. 75% were replacement in 2011. pc is not dead, we are just waiting longer to replace them. melissa: isn't the tablet contributing to that? >> absolutely. melissa: it slows down when you go and replace your laptop or your pc because you do not use it quite as much. >> absolutely. we sell pc shipments fall worldwide radical changes to user interface and microsoft windows has made pcs less

attractive. this office, we still use pcs. microsoft, a lot of businesses are upgrading to windows seven right now because the windows xp licenses are expiring. people are simply the line replacement. they are buying tablets, but that does not mean they are giving up on pcs. melissa: adam, thank you very much. lori: let's talk about commodities. prices are down nearly 7% year to date. will gold be able to regain its shine? sandra smith. sandra: really interesting trade going on here with gold. a lot of the big wall street firms, despite this run-up in prices today, gold up, this is a

long turned downward trend that we are in. this is according to citigroup, also goldman sachs joining. citi private bank says it is getting out of its goal position altogether. they are getting out of the gold trade. it looks like there could be further room to the downside. lori: natural gas hitting a 20 month high. >> natural gas is the best performer on the cme group. more than a full percent. we have colder than normal temperatures rolling across the united states. a lot of folks in the east coast are pumping up the heat. you also have a report out from the energy administration reporting a 14 billion drop-down in natural gas supply. that was not as big as expected, but still a significant

drop-down and supplies. that is the highest price that we have seen for natural gas in nearly two years. lori: great perspective. sandra, think you. melissa: $1500 per employee every year. that is about three times more than the $500 larger firms pay. my next guest says we cannot afford to hold them back. he is on a mission to change it. joining me now is congressman sam graves of missouri. why does it cost small businesses more to comply? >> they have fewer employees and also do not have the, you know, teams or resources simply to be able to comply with all of the complexities of the tax code. melissa: what is the solution,

in your mind? >> we do not want small businesses to be left out. we are talking about tax reform. we are talking about lowering rates for corporations. we want to make sure that small businesses are not left out. the vast majority of small businesses file their taxes as an individual or a couple. melissa: without also include simplifying the tax code? >> absolutely. we have to simplify the tax code. this thing is tremendously large. it is just far too complex. this has been an ongoing issue with the federal government. simplification is a huge part of that. melissa: it seems like you are fighting a losing battle.

all we hear lately are higher taxes. no one is getting their taxes lowered. >> that is one area that we are looking at to stimulate the economy or to get growth in the economy. lower those tax rates. big companies be as competitive all across the world. you have companies that will be looking to other places to produce. that is one of the things we are trying to do to a lot of the companies. melissa: what do you think are the hopes of you winning the argument? we cannot afford to give tax breaks to the wealthy and to corporations and pay for it by cutting it from people who really need it. how do you battle back? >> the bottom line is if you continue to raise taxes on the job creators, we will not have job creation. that is what this is about.

you have a lot of people out there who have simply quit looking for work. if we wanted to stimulate job creation, we have to allow those companies to be able to prosper. again, we have the highest tax rate in the world when it comes to businesses. you will not be very competitive in the world. i think we have a very bipartisan opportunity to do this. melissa: when do you think we can see results? >> we are hoping this year. we are looking specifically at small businesses which creates the majority of jobs in this country. we are working with this through many committees. it is an effort that many of us are working on. i am very hopeful that we will get something done this year and hopefully we will get it through the senate. melissa: we look forward to it. congressman, thank you for coming on. >> thank you. lori: carnival cruise. how you could benefit.

melissa: yum brands scrambling to deal with the bird flu in its most lucrative market. lori: the irs, or like the spy rs, they claim they can read your e-mails and text. melissa: silver and copper trading higher. we will be right back. ♪

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melissa: breaking news right now. a formal complaint regarding the disgraced partner that gave confidential information about herbalife and sketchers to an investor. it looks like it goes way deeper than first reported. >> major breaking news on this case. it now appears that scotland in did not stop back giving his friend inside information about

herbalife and sketchers, but also gave him information about another one of his corporate clients, deckers outdoor. now we have three stocks involved in this case which broke a week ago where kpmg partner london was posted by the feds for tipping off this guy. here is one of several major developments here that is breaking right now. the golf buddy has been cooperating with the feds since january by wearing a wire and tapping phone conversations with london. details in this report, during conversations, shaw was having concerned about receiving inside information in advance of things like acquisitions and mergers. london apparently told him that

he would need to see the press release to be absolutely certain, but london was in essence saying do not worry about it. these acquisitions are going through, i know it. according to sources, when london agreed to cooperate, he did not reveal all the companies he had tipped off his friend about. not only is deckers the new name involved, london apparently tipped off shaw on to mergers and acquisitions. this is much more deeper and complicated by the minute. will shaw, this jeweler who is a golf buddy, will he get a reduced sentence for cooperating so quickly? we do not know that yet? will london face a tougher sentence because he was not

totally honest about what he had revealed when it came to insider information. we have nathan hochman. he is the lawyer representing the jeweler who got the insider information and or the wire. how did this all start and how much money did his client make it what did he pay out to the kpmg manager to get this information? as we just go through this complaint, it is a huge story because the kpmg partner has, of course, been fired. he was in charge of earnings reports well in advance. all kinds of accounting of major companies out there. i am checking decker stock right now. it is up about 1%. again, to have revealed this information to a golf buddy got a jeweler out in los angeles, is

very much filled with intrigue. fox business is being told by sources that the jeweler, once his account, his trading account was frozen last year without any explanation, he then got very concerned and it was then just a few months later that the sec subpoenas that jeweler and said we want to see your records immediately. he hired this lawyer and we will hear from that lawyer at 3:00 p.m. eastern time in a fox business exclusive. the lawyer said you must work with the feds call but also the department of justice and the fbi. he did. they asked him to wear a wire. the total of what this partner got is well in advance of just

$10,000. there was apparently jewelry, concert tickets and meals that were paid for. i am just looking through this right now. there were quotes involved from the wiretapping. this comes back to what we have seen in the past. the wiretapping tends to be challenged sometimes by defense attorneys. we will be watching all of that and much more. the criminal copy and it appears that scotland and will be charged with securities fraud as for shaw, the jeweler. this case goes well beyond what we initially thought. those two companies in the past couple of years have had archers

and acquisitions that kpmg had its work done. they gave this to shaw and advance. i will send it back to you on that note. 3:00 p.m. eastern, fox business exclusive. melissa: great reporting. thank you so much. a lot of information. lori: we will keep an eye on those stocks involved with the kpmg story. melissa: as we do every 15 minutes, let's get a check on the stocks. nicole petallides. nicole: take a look at two names. one that is a real winner and another one that is under some pressure. right aid. they will post a full year of profit here. the fact that they have just been selling more prescriptions.

particularly, generic drugs. there is the 52 week high. it is up 18.5%. we will turn this hour around. a name that certainly has been under some pressure. that is blackberry. they have their new product out. everyone waited about a year and a half for this one. reports say there are more returned than people actually buying it. not good. everything went into this phone. that is not good if it is not being received as well as they had hoped. back to you. melissa: thank you so much. the irs says it can dig through your e-mail and text messages.

lori: it really is unbelievable. let's check the dollar today. the dollar is down. 1.31 against the euro. we are back after this. ♪

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♪ >> 22 minutes past the hour. hi, everyone. i am jamie colby. this is your fox news minute. a bill that includes expanded background checks and penalties for gun trafficking was being tried to be blocked. across the country, severe storms with snow, rain and high winds. some of the most violent weather hit the st. louis suburbs where homes and vehicles were damaged by strong wind. thank goodness, no reports of serious injury. here is a look at the leaderboard. the masters golf tournament is on in augusta, georgia. tiger woods is still the

favorite, but he is currently tied for 11th. ouch. i am jamie colby. back to melissa and lori. melissa: thank you. take care. agents can read your e-mails and tax without a warrant. the fourth warrant does not protect internet communication. i am a little nervous. i never cheat on my taxes so i have nothing to be nervous about. >> here is the test. if you and lori sent an e-mail to each other, do you subjectively expected to be private? melissa: i expect it to be

private if it is not all my work e-mail. >> do you think her expectation is a reasonable expectation? lori: i think it is private. we e-mail quite often. i know she is professional. it is okay for everyone to see. if i am initiated the e-mail, it may be a whole different story. >> do you believe your e-mail is private and does that make sense that it would be private? if you are e-mailing the fox business network to tell your opinion, would that be expected to be private? no. if you are on facebook telling everyone you are going to the soccer game in rome, that would not be private. if you say i am going to roll this week to go to the best restaurants and to go to the biggest soccer game and concert, see you next week from your

gmail account, they could subpoena without anybody knowing. they could apply it to her tax return. they got these guidelines from the irs. they released them this morning. that is why it is breaking news. in 1986, there was no blackberry word or e-mail. we have to catch up with the times. you are not allowed to do it anymore. the bottom line is, their

reasoning is, your e-mail is staying on the gmail account. if they could see it, we could see it. that is garbage. i think congress steps in and says this law we enacted in 1986, about electronic devices, it is time for a little update. melissa: that is reasonable. >> let's hope they do. lori: thank you, arthur. the business of taxes. president obama targeting cigarettes in his budget proposal. melissa: despite carnival cruises recent troubles, they are offering a deal you may not be able to refuse. ♪

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lori: stock market is ripping here. as we do every 15 minutes let's go back to the floor of the new york stock exchange and check it with nicole. mixed news from retailers not dammening the bulls, that's for sure. >> retailers less than expected with retail numbers are doing better than expected. i have limited brands here. it is up 5.8%. that is certainly a winner. bring you over to tj maxx's parent which is tj maxx. tj maxx is at an all-time high. we saw retailers come out with a mixed bag, right?

we've had cold weather, lingering concerns about the economy. the labor market which seemed to be picking up. they lost some momentum. a mixed bag. they expect april sales to be better as weather improves as well. many back to you. lori: thank you, nicole. kfc says the latest outbreak of bird flu is hurting business. the avian flu outbreak is having negative impact on restaurant sales in china, its more lucrative market. the company reported a 13% drop in same-store sales in the country, worst tan analyst expectations. the parent is trading slightly higher today but they're down six 1/2% in the last two weeks. melissa: after four incidents in 2003 alone carnival cruise is trying to say i'm sorry, dropping prices on its carnival imagination cruise to $38 a night. less than one night at a motel 6. ticket prices on -- there you go.

ticket prices on carnival's infamous cruise vessel the try all dropped to $58 a night. it remember the triumph was stranded at sea in mid-february with a engine fire. more than 3,000 passengers were trapped on board. we'll see if it helps get the company afloat. they would have to pay me a lot. lori: 38 bucks a lot. that is pretty much a lot. that doesn't cover overhead you got to think. melissa: you think. lori: the president's budget proposal taking aim at cigarettes. president obama is raising the tax rate on cigarettes from 94 to doubling it to $1.95 a pack. who does the tax really hurt? dennis kneale. hello, dennis. >> president obama wants to make a big deal soaking the rich who don't pay fair their fair and not raising taxes on anyone else particularly the poor. if the president gets his way on the budget will have raised taxes on cigarettes 400% in four years. here is why that hurts.

it turns out half of smokers in this country earn less than $25,000 a year. melissa: really? >> 30% live below poverty line. new york state, a study of 13,000 smokers found that the poor spend almost 25% of their household income on tobacco. first just 2% spent by the rich. in new york, now, the taxes on a single pack of cigarettes are up to $4.35. melissa: a pack? >> a pack. just taxes on top of the cost. lori: what does total pack set you back in new york city? >> $10 or $12. melissa: wow? >> the national average for people make under $25,000 and smoke, 14% of your income goes to tobacco, raising taxes hugely, 93% from the recent level. they were 39 cents a back in '09. bush veto attacks increase twice. obama's first tax increase when he got into office was this one when he went from

39 cents to $1.01. now they want to bring it up to a $1.95. you're hurting the poor the worst. one thing if we take the money, $78 over 10 years we'll fund health care over tobacco problems. turns out when prices go up, everyone quits. poor don't quit. rich people quit but the poor don't quit smoking. lori: why are they picking on smokers? compare this to the alcohol tax hasn't gone up since 1991. >> you guys put together figures startling about that why is it alcohol is spared and i guess because they don't kill quite as many people and, a lot more people consume them. lori: that might be debatable over time. >> distilled spirits, 2 bucks on a $35 bottle. melissa: maybe should correlate smoking and voting an alcohol and voting. maybe smokers don't vote as much. >> they will use this money to expand 4-year-old kindergarten 4-year-old kids.

money from the very poor to help people who are doing okay. lori: irritating to say the least. melissa: dennis kneale great stuff. great reporting. thank you so much. >> no one notices. no one is complaining. melissa: i never heard anyone else talk about those states. >> thanks a lot. >> new record highs for the dow and s&p. we're back on the floor of the new york stock exchange to get some trader reaction. melissa: the president is meeting with bank ceos at white house. the event is closed to the news media. charlie gasparino has ways around that. we'll tell you what he is hearing next. lori: oh, no. look at interest rates. we have a stock market rally so they're selling bond today although not too much. 10-year yielding dropping below 1.8. 30-year is 3% even. back after this. [ male announcer ] this is joe woods' first day of work. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef bere opening a restaurant specializing in fish and game from the great northwest.

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>> i'm cheryl casone with your fox business brief. four of japan's biggest automakers are rorl recalling 3 1/2 million vehicles worldwide. toyota, nissan, mazda all issued the recall over airbag problems. that is the largest recall by the second largest supplier of airbags. no injuries or deaths have been reported. travelers could see relief at the pump this summer driving season. according to the energy information administration gasoline should average $3.63. that is slightly below average prices last two summers. ea ia says is expect as small drop in gasoline

prices and less consumption and hire inventory levels. the average rate on a 30-year fixed is now 3.43%. that is the latest from the fox business network, giving you the power to prosper

lori: president obama meeting with wall street honchos at the white house but which president obama will show up the president accused bashing banks and recently signaled now he wants to work with the financial community on economic issues? charlie gasparino has the latest on that? >> that was a wonderful toss. melissa: it was. lori: very, very well-put. >> very well-put. you got the irony. melissa: i did. i could feel the irony in my bones. >> here is the interesting thing about the meeting today and jamie dimon will be there, ceo of jpmorgan came out with his recent

letter which is kind of critical of the administration and recent policy. moynihan of bank of america. i spent time talking to people that know what is going on in this meeting. it is pretty interesting. preceding this meeting was an interesting sort of outreach to wall street from senior white house advisors to people like dimon and blankfein. you know all of them, basically to discuss the economy and what they're saying is this. the president spent his first term, paraphasing what they're saying not putting quotes, president spent first term bashing you guys. fat cats on "60 minutes". melissa: well i admit that? >> his people are saying this. melissa: okay. >> now we want some consideration, want detente. the president does care about what you have to say about the economy. at least that's what they're saying and he does want to listen to you. in past meetings like this, obama periodically has these

meetings throughout his first term. this might be the first one in the second term. periodically would have the meetings. way it would go is every ceo would go around the room and say a little something. obama would attack them. basically, launch into, you know, we don't think you're doing the right thing, blah, blah. they tell me, now this meeting apparently is going on as we speak right now, they tell me they don't expect that to happen. we expect this to be kind of a love-fest where he really does, the president really does start to listen to some of the critiques that these guys have about the economy. and, we'll see what happens. everybody, i mean buyer beware when dealing with president obama on these issues because bankers have made such a good foil for him in the past. melissa: right. >> this is second term. he is not running again. i don't know how much more mileage he gets. this is kind of key i think. you know this, i don't want to make jamie dimon, stand him out in particular because they all believe this but you know reading

dimon's letter yesterday which was very interesting, i read the whole thing. i did some tweets on it. went on the air. forget about what he said about the london whale, what was interesting what dimon said about fiscal policy coming out of the white house. if you read it, dimon believes we have a very slow recovery, one of the slowest recoveries ever coming out of the recession. dimon doesn't believe if not for fiscal policy, that fiscal policy is hampering very robust economic growth. what do we mean by fiscal policy? taxes. corporate tax code in particular he pointed out in that letter. immigration to a certain extent. he would like more ph.ds to be able to stay in this country but the fiscal poll which, let's face it, say it is bipartisan really isn't. the president controls, president and democrats control two third of the, of the government. fiscal policy, coming out of washington under the obama administration has been pretty dismal, okay?

it is pretty bad. and i think, you know, i think you're going to hear some of that. now they may not, when you sitting with the president, you do it in a more diplomatic term, tone but i think --. melissa: never seen jamie dimon be diplomatic. i don't know that he is capable of that. >> he will be completely diplomatic particularly given what is going on with him. jamie dimon take him out of it, you're always diplomatic with the president. he is facing one of the toughest time in his career aside from this. jamie might lose the chairmanship. that is, we were first to report that here. journal did a story. they are bracing for that. there is real possibility based on what is going on with the london whale and activist investors are pinpointing him. so right now i think jamie, jamie would always be polite, even more so now but all of them will be polite but i think the central message they will give them and we'll find out later, yeah, is that fix fiscal policy. i'm sorry. lori: i'm sorry.

want to make sure i don't want to interrupt you. been down that road. >> that is because you're both interrupting me at the same time. one at a time is fine. lori: well, that is what our job is, right? >> is that in your contract? anyway, go ahead. lori: obviously we know what the president gets from these meetings. it is all politics. >> right. lori: you said the ceo's will be diplomatic including jamie dimon. what do they have to gain from going out to d.c.? >> banking is a highly regulated industry right now. i think they do, listen, let's face it their jobs do depend somewhat on the economy. i think what is interesting about dimon's letter, this has been echoed by people like gary cohn and liz claman's show, number two guy at goldman saks, they all talked about it, we're in uncharted territory when it comes to the monetary policy with the fed printing money. melissa: untested medicine he said, right? wasn't that the quote you pulled out of there? >> clearly whatever it is we

never had this many qes which is essentially the fed going in there and buying bond and throwing money into the system. at some point that will have to stop. okay? when that stops, interest rates could really skyrocket. when that happens, man, that could really screw the economy up in ways and cause disruptions you don't realize. like leverage. leverage is good buying into it when the markets go up when you borrow but when it comes the other way --. melissa: that is horrible. >> that could happen to us. melissa: charlie gasparino, thanks so much. lori: let's get an update on the markets. keith bliss is on the floor of the new york stock exchange for us. keith, this market is on a tear. the dow up 74 points right now? what is it, 12, 13 records for the dow in a short period of time? >> right. lori: what is your take on all of this? is there a shoe that is going to drop at any time soon? >> well there's lots of things, a lot of inner market trend that don't really add up inside of the market but as long as you have all the central banks around the world playing

hotel california monetary policy, you can check in but you can never leave, it is an odd day when you look at inner market trends. you have got equities up. you've got gold up. you've got bonds up and you've got the vix up. that should not happen if you have a normal market reaction. will we set another record high this afternoon? sure, why not. seems like this market will not go down. lori: people are saying for two weeks, don't get in now, if you missed out, you missed the run. it keeps as you pointed out it keeps turning higher. what do you do? what is the best course of action at this point? can you buy stocks? can you go defensive? defensive names larkly led the rally. >> if you have bad economic data, get in defensive sectors, utilities, consumer staples, things like that. they have opinion the ones that have been leading the rally. this is very particular to watch the next two sessions. yesterday we had a break it i don't on the s&p, a very large breakout, one 1/2%.

normally you see that pullback an consolidate on the next session. we're not say seeing that today. if we stay up levels push higher today, tomorrow even monday, we get a confirmed breakout and could certainly push higher in the long term. all the long-term and short term trendlines are still intact. that bodes very well for a bullish segment in this market. lori: keith bliss with the technicals for you, folks. thanks so much. >> my pleasure. melissa: so a gamble that's paying off. we're live at maryland live casino that is raking in a million dollars a day for the state. wow. lori: mother nature's wrath is the taxman's delight. how is that possible? we'll tell you about one state's effort to tax the rain. how is that possible? tax the rain. what will they think of next. ♪ all stations come over to mission a for a final go.

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melissa: more on the business of taxes. take a look at this statistic. the state of maryland imposes a whopping 67% tax on slot revenue. that's crazy. in an effort to make more none -- money maryland life casino is having gaming tables. jeff flock is live in maryland. are you winning? are you up on the day? >> listen i'm the worst gambler in the world. i can't on pick stocks much less than this. 67% on slot machines. do you know how many there are? 4,000 slot machines. they just added now table games to this. i'll tell you, 67% tax rate, that is highest in the nation but that does not generate the most revenue. million dollars a day, that is nothing compared to

pennsylvania. look at top states. pennsylvania generates $1.5 billion worth of revenue each year. nevada, indiana, new york, all well over 500 million. lots of money. 7.9 billion each year coming into state coffers from gambling. talked to the man who developed this. he threw the first set of dice there last night. i asked him, mainly about the economy. can this continue? >> i worry about the economy. i know the stock market is up and that's great, but, are the underlying fundamentals there to sustain it? >> sustain what? >> i'm not sure. what happens with the gambling is, it is basically a night out for people. it is an entertainment. we're not quite as sensitive as you might think to the ups and downs of the economy. >> one of the questions, melissa, is, are they getting oversaturated in

places like this? this is the third largest casino in north america. counting all of the vegas casinos. this is huge but a lot of states have this now. i leave you with developments of the companies around the company. these are not all gambling developments. he is mainly a developer and we'll talk to his president of gaming next hour here on the fox business network, spending a day looking how much tax revenue is coming from these places. it's a tax nobody seems to mind. melissa: jeff flock, thanks so much. >> thanks, melissa. lori: here is a tax a lot of people mind. maryland may be making money off its casinos but not enough to clean up the chesapeake bay. believe it or not, governor martin o'malley implemented a quote, storm management fee. every time it rains for all residential and commercial properties. the rain tax will be assessed based upon square footage of structures and paved surfaces on the property. melissa francis is shaking

her head. melissa: that is unbelievable! unbelievable. you should all revolt and not pay it. lori: i don't blame you. melissa: coming up tonight on "money," we have the founders of ever. it is the first bar in new york city to accept bitcoin. we're going to talk more about this bitcoin bonanza. it is a frenzy right now. we'll ask him about the massive drop yesterday at the end of the day which halted trading. we'll ask how they set their prices when trading is halted. can you get bitcoin change? all the bitcoin questions answered tonight at 5:00 eastern. lori: we'll look forward to that. tax freedom day coming later than usual today. scott hodge will tell us when most earns americans fill finish working. i have to work until november 15th. melissa: that is crazy. lori: stay with us, folks.

ashley: good afternoon, everybody, i'm ashley webster. tracy: i'm tracy byrnes. stocks pushing even higher as we approach the close. the dow is gaining, look at that. we're about 145 points away from that 15,000 mark. one big money manager says there is even more money to be made. we have his strategy coming up. ashley: our special report, the business of taxes. tax foundation president scott hodge says america needs tax reform right away including a flat tax. we heard it all before. he is here to explain. tracy: hewlett-packard and microsoft shares plunging after a stunning drop in pc sales. investors taking a hard look what the future holds or the entire industry. ashley: first let's get to the stocks on track to close at new record highs once again. it is like a minute by minute event, isn't it, nicole petallides at the new york stock exchange? nicole. >> it has been an exciting time on wall street, ashley and tracy. many of us remember when we

launched the fox business network in 2007. we were above 14,000. from that time we went into the financial crisis and i spent day after day about a market selling off and layoffs and dividend cuts and the like. i get the opportunity to say we're breaking record and continuing to do so even with an eye on 15,000 for the bulls out there. seems like a market that just won't quit. the vix, the fear index, has moved into the green. dollar remains to the downside, euro at a six week high. here is year-to-date on the dow jones industrials. they are you up 10% this year. several names on the dow jones industrials hitting record highs, disney, home depot, mcdonald's, travelers, johnson & johnson and 3m and united technologies. when you talk about the names you get a slew of different times of names, right, whether consumer or financial and the like so health care and industrials. back to you. ashley: may not reflect the

economy but so what? it is onward and upwards. nicole, thank you so much. tracy: nothing seems to shake these markets but what happens if the economy slows down in the second quarter? we have chief investment strategist at russell investments and he is with us. a lot of people say earnings will be a big buzz kill but the bar is so low someone eventually will jump over it. does that mean this thing is still off to the races? >> well, off to the races i don't know but do we like equities? yes. the case i've been making for the last two years and continue to make today as an investment goes i like equities because i hate cash. and bonds look like they're probably going to give you probably a zero rate of return this year. we think equities will offer you north of that. ashley: eric, you say you're telling your clients to respect a pullback at any time. we've been hearing this the last eight months. as long as the fed keeps pumping out the money do we really think there is a sealing to this? >> there is always a ceiling to it but i don't think

we're there yet. when we say expect a pullback at any moment, what we're fulling telling clients is, invest in equities because there is the expectation on our part they will be significantly or meaningfully higher in a year or 18 months but you should expect same kind of volatility we've had last four years to manifest itself and we may get a downturn of 10%. waiting for that downturn in the last ten months and waiting for ga dough in the play and gadot never shows up. tracy: you were wait -- what worries you? is it domestic policies here at home? is it another cyprus explosion? what happens? >> there is a lot of things that worry me but i think if you put it in hierarchy the thing we're worried about is europe and what we're really worried about is that the toxic politics of the euro crisis actually, basically forces a group of policymakers to make what we

would believe is a massively irrational economic decision in the face of bad politics. we still think that is very up likely event this year but it is the one that is the biggest on the board. ashley: eric, defensive stocks have led the rally. there has been a lot of discussion about that. when do we see money perhaps come into cyclicals? what are you telling your clients where you see the best opportunities? >> well, yeah, that is interesting. we're barbelled. if you look at our sector exposures in say the russell 1000 funds we're overweight health care and overweight consumer discretionary. we believe the consumer is far from dead. we think that will power consumer discretionary. we think health care remains after its big run in the last year, it still remains the most attractively priced of the more defensive sectors. we're barbelling our exposures and telling clients we're in a grind it out, stock selection kind of a market and not a big mac crow environment market. tracy: we have a screen up right now of some of the

discretionaris. although mcdonald's many would argue is a staple p you have starbucks, target, nike, all the stocks are up. all of them seeing all-time highs. can they all keep going? i think a lot of people worry that their run might come to an end soon. >> look it, i think the run is going to slow down. you're not going, it is highly unlikely we'll be able to continue the pace we've seen for the first 3 1/2 months. we're up almost 13% on the russell 1000. but do they have a chance to go higher? >> yeah. i think the rumors of the demise of the american consumer have been greatly exaggerated over the last four years. they are astounding in their ability to continue to spend in the face of tax hikes. ashley: eric, again, sell in may, go away. historically we've seen that but there is nothing that really the history books can be compared to what is going on in the markets now. what are your thoughts? >> well, you know, it certainly something you need to watch particularly with the sequestration cuts now hitting the economic numbers

now. we think they were probably going to see a flatting of certainly the rate of growth in the u.s. economy. it can't keep expanding at the pace it has been expanding but we don't think that will be a enough to cause a market square. i'm not sure what else you buy other than stocks? bonds and cash don't particularly look attractive from a return potential. tracy: eric, thank you for all that with russell investments with a smile on his face the whole time too. a optimist. ashley: why not. the market is record breaking all the time. tracy: enough of analyzing it. just go with it. ashley: go with the flow, momentum, the big mo. we're kicking off our special report, the business of taxes with one of the hottest debates in d.c., tax reform. it is a critical topic as treasury secretary jack lew testifies on capitol hill about the president's budget. rich edson in washington with the very latest. rich? >> and a lengthy discussion on tax reform at a hearing this morning. ways and means committee chairman dave camp chaired it. we sat down with camp for an

exclusive interview. camp and democrats support revenue neutral corporate tax reform. eliminating reducing tax preferences to deductions to decreasing marginal rates. for individual tax reform the white house looking to raise taxes $580 billion through cushing deductions. camp says he approaches that approach. >> tax reform is bigger than just loopholes. i mean, you know, if you do a piecemeal approach you're not going to get the kind of strong economic growth that the country needs to see it. >> we've got to get our fiscal house in order. as part of that we need to raise more revenue and we think tax reform ought to produce the ability both to raise revenues and simplify the tax code. >> camp says he is optimistic congress can complete tax reform. he is encouraged that the white house has a placeholder for corporate tax reform in its budget. when it comes to reform goals, democrats and

republicans are hundreds of billions of dollars apart. for treasury secretary jack lew, he goes another round in congress, this time before a senate panel. that begins at the bottom of the hour. back to you. ashley: hundreds of billions of dollars apart. rich edson, thank you so much. in d.c. so much more ahead in our special report, the business of taxes. coming up tax foundation president, scott hodge says president obama's reforms are another form of wealth redistribution. he is here to talk about that. tracy: he is onto something with that flat tax. we knew it was bad but not this bad. pc sales plunging last quarter. we have scary numbers next. as we do every day this time of day, look how oil is trading. it is down $1.40. we're at 93.25 a barrel. we'll be right back. she's always been able to brighten your day.

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tracy: the pc-makers, chip-makers and more getting slammed today on a report showing pc sales plunged in the first quarter. ashley: yeah. tracy: adam shapiro is here though. he is going to tell us that the pc is not dead, right? >> not dead. we're in a transition period. you don't have to be a genius. everyone knew this was coming. in the first quarter largest drop in pc shipments worldwide down 14%. hewlett-packard obviously taking a hit. they have the largest market share. dell, they're down as well. here is something people aren't talking about. it is not that the pc is dead, giving up the pc to go buy a tablet. you're buying a tablet but delaying the repurchase of new pc. here is what sanford bernstein made to say about this. their research department put out and note quote, we don't ultimately believe tablets are replacing pc's and contributings to pcs using less and pushing out replacement cycle. ashley: yeah. >> this go further to

explain why big deal. 260 million pcs shipped in 2011. 75% were replacement or delaying the replacement of those now. ashley: right. >> that is bringing sales down. tablets will surpass pcs in sales. it will happen this year or next year they're predicting. but at the end of the day pcs are not going anywhere. go ahead, answer your question. tracy: where do laptops fall about this. >> yeah. tracy: laptop, desktop. ashley: somewhere in between. >> can i rephrase it? how can you make money on this? microsoft is trading down. goldman sachs cut microsoft, moved their price target from 30 bucks a share down to $27 a share. other analysts downgraded microsoft are not going that aggressively to 27 bucks right now? our office pcs are being upgraded right now to windows 7. windows xp the licenses are expiring. a lot of software in the works, microsoft will benefit from that. two, intel launching a ah

new chip processor this summer. that will help. microsoft is offering deals to hewlett-packard as well as dell on licensing fees. so that their units can be somewhat more price competitive as we go forward. don't count out microsoft just yet. maybe goldman sachs is a little aggressive. "morningstar" saying 35 bucks a share, microsoft. ashley: very good. adam, thank you very much. you have a laptop. you have a tablet. you have pc. tracy: we have everything. >> she has a typewriter. tracy: i prefer the typewriter. ashley: old-fashioned, hunt and peck. all right, gold rebounding from yesterday's lows on a weaker dollar but prices, well they're still down nearly 7% so far this year. sandra smith in the pits of the cme with today's trade. sandra? >> well, gold already cutting its earlier gains in about half right now, something that we're watching is dollar index. right now 99.93, really close to that $100 level or the 100 point level for the index. so you get a stronger dollar. that does weigh on gold.

we have been seeing that trade at work. that being said, the gold trade, long-term, is bearish. that is according to citigroup. goldman sachs, barclays, chiming in this week. in fact if you look at gold, up five bucks at 1564 an ounce. barclays says if it drops below a key level of 1530 we could see gold fall another $100 from there. the gold trade is being closely watched, guys. ashley: sandra, natural gas is hitting a 20-month high. >> yeah. there is a big forecast out right now from the commodity weather group, big weather forecasting group, widely paid attention to by this industry. they came out for a forecast for the next five days. colder than normal temperatures stretching from denver to texas. and that is having a big impact on the natural gas market right now as natural gas actually, one. biggest movers on the cme group today. and as you said, reaching levels that we haven't seen in nearly two years. so, the natural gas trade

definitely on, guys. by the way, we have a big energy information report this morning. the eia report showing a 17th consecutive weekly draw down in natural gas inventories. that is also going to push the prices higher. so we're seeing a big move there as well. ashley: that helps on the upside as well. sandra smith. thank you so much. >> thank you. tracy: the dow is up 40 points right now. stocks off the session lows. nicole petallides on the floor of the new york stock exchange. nicole, what is going on? >> that's right. we're taking a look here as the dow jones industrials are up about 40 points. we hit a record highs earlier today. we're off the highs at the moment. the banking index is actually turned into the red. so while you're seeing some names on the dow hitting all-time highs, the bank stocks are pulling back some. we're focusing on jpmorgan and wells fargo. they report quarterly numbers before the opening bell tomorrow, really kick off earnings season for the financials. they will be the first of the bunch to tell us how the

latest quarter went for them. we'll watch earnings per share and revenue for these two companies in particular both which are fractionally higher at the moment. as i check all the banks they were pretty much mixed and some were dipping into the red territory. president obama is expected to make a drop-by appearance at a meeting of executives and white house staff which up clouds some of the big guys and jamie dimon jpmorgan, brian moynihan of bank of america and. we'll see if we get any news out of that in washington. back to you. ashley: all right. tracy: nicole, we'll see you in 15 minutes. on deck a urgent call for tax reform. tax foundation president scott hodge says it definitely should include a flat tax. he is here in our special report the business of taxes. ashley: as we head to the break, first let's look how the dollar is moving today. sandra mentioned it is weaker and it is indeed. all the currency moving up against the dollar, canadian dollar, guess what, the yen, under attack still lower

against the u.s. dollar. we'll be right back.

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>> 21 minutes past the hour right now. hi, everybody, i'm jamie colby. this is your fox news minute. the senate is expected back from recess this hour and

they're continuing their debate on gun control. it is on center stage for sure. gun legislation clearing a procedural hurdle earlier today. the bill including expanded background checks and new penalties for gun trafficking advanced after the senate rejected efforts from conservatives to block debate. sandy officially retired from the list of storm names by the national hurricane center. the october 2012 storm responsible for 147 deaths and estimated $50 billion in damages. storm names usually resighed after six years. sandy is the 77th name to be retired since 1954. drum roll please. it is replaced by sara. no h. that will happen in 2018. there is a new leader at the masters golf tournament in augusta, georgia. australian leads david lin of britain. tiger woods climbing up the leaderboard. the four-time masters

champion is tied for forth. that is the latest news on the "fox news channel." back to ashley and tracy. ashley: tiger woods lurking by. >> not over yet. ashley: take care. more on our special report, the business on taxes. our next guest says americans need tax reform right away and he says the flat tax is part of the answer. a lot of people are pushing for it. it hasn't happened yet. scott hodge is the the president of the tax foundation. thanks for being here. the conversation revolves stripping out loopholes and reducing tax rates and simplifying the entire system. why is that such a tall order for congress? >> behind everyone of those loopholes we call them, there is an army of lobbyists that are stepping forward to defend them. and they come out of the woodwork at this time of the year when you have talk of tax reform and they start lobbying members of congress to keep preferences in the code because their whole industry is built around each and everyone of those deductions. ashley: amazing to me when

you look at some of the stats on the tax code. americans spend over 160 toll billion every year trying to get their way through the tax code. it takes the average american 13 hours to comply with the tax code. it is more than 4 million word long and in the past 10 years, there have been 4400 changes to the tax code. that is smore than one every day. i mean at some point can we get some bipartisan agreement that this needs to be addressed? let's start with the flat tax. why do you like the flat tax? >> because it is simple. it has, a very broad base. and there are very few deductions and it has a very low rate. that is really the key here. those are the kind of things that promote economic growth. we've seen it in other countries that moved to the flat taxes or simplified taxes. that it helps not only can raise, either the same amount of money or often times more, but it is simply easier to comply with. it reduce as lot of inefficiencies that you see in the economy. but, we are seeing some movement in this direction

as congressman dave camp, the chairman of the ways and means committee is actively studying tax reform right now. it is said max baucus the chairman of the finance committee in the senate is also very interested in fundamental tax reform. hopefully these will be the catalysts for a long-term debate on overhauling the tax system. knock on wood. ashley: yeah. scott. it always seems to come down to some basic principles. the key one of course with president obama is, high every taxes for the wealthy. republicans say any changes should be revenue neutral. but to bring the rates down, don't more people have to pay more in taxes? that is my question? that is pretty politically hard to do, isn't it? >> it will be very hard to do because here's the problem. half of all americans roughly pay no income taxes because of the generosity of all the credits and deductions in the code already. so we do already have a very progressive tax system in which the rich are paying a

disproportionate share of the tax burden. how do we put people back on tax rolls and cut taxes at the top? all those people are pay paying the most of the tax burden already. so this is real conundrum that is facing tax writers on capitol hill as they try to overhaul the tax system. do we put more people on the tax rolls? how do we cut taxes for the rich if they're already paying most of the taxes? so it's a real challenge. ashley: it is. and how likely is it we'll get any meaningful tax reform under the presented a administration. the last one to really do it was ronald reagan back in 1986. does, mr. obama have the political power behind him? does he have the desire, do you think to get this achieved? >> i think it is still an open question. i think what is, encouraging however, is the enthusiasm for tax reform in both the ways and means and finance committees, between chairman camp and baucus. that could be the catalyst, maybe not for this year but these things take time to

guess state and build public support and hopefully we can see more of a grassroots effort to push tax reform over the goal line. it may in some cases be over the tepid objection of president obama. he just may simply have to go forward with it against public support. ashley: right. time will tell. hope springs eternal. all of those things. we shall see. >> exactly. ashley: scott hodge, tax foundation president. thanks so much for joining us today. appreciate it. >> you bet. thank you. tracy: dead on with the lobbyists. ashley: yeah. they protect those loopholes. tracy: and as scott said, that earned income tax credit. people are not paying tax now. you have to bring them on. ashley: yeah. tracy: hmmm, as you said, hope springs eternal. much more ahead on our special report, the business of taxes. the irs says it can read your e-mails, huh, whenever it wants. gerri willis is on the story. let's look at some winners as we head out to break.

tracy: all right, we have some breaking news on the white house new developments from the meeting between the white house and some of the financial leaders of the nation's biggest banks. charlie gasparino in our newsroom with the latest. what have you got? charlie: he did not call them fat cats at least. i hear this is a pretty cordial meeting, but kind of a take away here is what president obama said about the economy. according to people in the meetings that ingredients are in place for robust economic

recovery. the bankers agree, this is interesting because the bankers have been critical of president obama's fiscal policy, but described as friendly and constructive, but the takeaways of president believes everything is in place basically for this economy to take off and the bankers agree. from what i understand this will be touched in private meetings with white house aides and some of the bankers. the third rail is how to get what is right now one of the slowest recoveries ever following a major economic crisis, how to get that slow recovery into where the president thinks it should be given everything in place, the banking system is essentially fixed, corporate profits are strong, corporate debt is down, individual debt is down, those

are the ingredients. the question is how to move forward. from what i understand, they will be addressing it at future meetings. obama to bankers, we have the potential for a great economy. the bankers agree. but how we get that spark will be discussed at meetings. if you noticed, it looks like something is growing out of my head, to the average viewer, this is like when you forget to plug in your iphone. tracy: binds me back in the 80s like maybe you had a ponytail or something. this is kind of interesting story and we will have more on this today. tracy: thank you for rushing for us. ashley: maybe you should lend more with all this cheap money you're getting. tracy: including 85 billion per month? is that part of the special sauce?

ashley: let's go to nicole petallides standing by. nicole: a record day on wall street again for the major averages. the dow and the s&p all-time record intraday highs. the nasdaq breaking highs we saw years ago, so a day the bulls are loving. could be the 14th record close of the dow jones industrial since march 5. a look at jcpenney. big news, of course we know johnson is out, they brought in the former ceo, but guess what, three more executives out, chief operating officer, the chief talent officer and the chief creative officer all exited jcpenney in the last 24 hours. we will continue to follow the story over the last year.

ashley: nicole, we will be back with you. tracy: our special coverage of the business of tax continues with a warning of what you write in your e-mail and text messages. kind of creepy if you ask me. the irs may be reading them. it is really creepy. >> the irs maintains they have a criminal tax evasion, they are the long arm of the law in addition to collecting taxes they say they can read your e-mails. a lot of people say that it's unreasonable search and seizure. you cannot do that, but the law is really old and outdated. if you look at it, and e-mails younger than 180 days is protected, older than that it is not. there are decisions from courts on both sides. most americans would say if you're reading my e-mails, you're going too far.

ashley: so here is fred jones in omaha. what is he up to? >> you already have a case and you know ashley webster failed to file and you want to come after him, you need his return. john smith has not filed for the last four years, you need information. go to his e-mail, his text messages. tracy: an attorney said you go on vacation, you write it off in your personal e-mail, went on this fabulous trip, there was no business whatsoever, they can come and get that and subpoena that. and i get caught. >> it is not going over a private network, it is a public network.

i can't believe this, since they are overstepping their bounds, but the iris is maintaining we are completely within our rights. what i'm quoting from his their own internal revenue service manual. they are not talking on the record about this. tracy: they don't even have the manpower to pull this off. at the end of the day, there are like four people working down there. ashley: reading e-mails. tracy: what do you have on the show tonight? >> we talk about this issue, so it will be interesting. also looking at other ways the irs may be doing more than they should. ashley: the irs looking at facebook and then they look at your income. tracy: dislike being on disability and posting how you just ran the marathon. "the willis report" tonight. ashley: oil closing down $1.14

at $93.51 per barrel. snapping a three-day winning streak for oil. tracy: coming up, the business of taxes. jeff flock gets again the best gig of the day. at the casino. talking to the head of gaming. ashley: as we do every day at this time, look at the treasuries. we will be right back. with the spark cash card

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on every purchase every day. told you i'd get half. what's in your walle >> i am lori rothman with your fox business brief. breaking news, facing charges. alleging london gave his friend confidential information about five client companies including herbalife and sketchers. he is cooperating with the feds by wearing a wire and tapping phone conversations with london. stay tuned, 30 minutes from now liz claman interviews the lawyer in a fox business exclusive and we'll get details you will noo hear anywhere else. he developments between the white house and some of the leaders of the nation's biggest bank. charlie gasparino maintain fiscal policy is still hurting the economy. and that is the latest from the

fox business network giving you the power to prosper.

tracy: the business of taxes and we're looking at casinos. the state of maryland imposes a walk and 67% tax on slot machine revenue. so maryland live casino betting on the gaming tables to bring in the big bucks. jeff: and they are happy to pay it. it is a win-win. i still don't know how to play. you know what i'm going to do, going to give you a look inside the high limit room, the vip.

you belong in here, i am not so sure i belong in here. >> i need to talk to your producer about getting you more funding. jeff: as long as we don't mind losing it all. all of these table games, high limit table games. it is incredible, a million dollars per day goes to the general fund thanks to your casino. >> an incredible impact on the local state economy. a million dollars per day everyday going into education. jeff: some states generate even more revenue. look at the top market. we all know about las vegas and atlantic city, chicago is a huge market. those are destination markets, this is not. you just have a dense population. tracy: the fourth largest metropolis in the united states.

6 million adults live with an hours drive of this facility so this is a destination regional property. jeff: cordish is known for his developments of all sorts of things. regaining peace, the growing peace because states are looking to monetize it. consumer spending on gambling right now is back on the rise again, and states need this as a means of revenue. >> absolutely. it is a great industry from the private enterprise standpoint as well as a public side. but there are only so many left. jeff: don't get oversaturated, you are saying. >> right. certain could be lucrative. jeff: it is the third-largest casino in north america counting all of the nevada, atlantic city and the rest. i want to leave with a note about what states draw the revenue in. pennsylvania believe it or not

$1.5 billion in state revenue each year. states are relying on it. >> absolutely. pennsylvania is now number two behind nevada. maryland will be number one taxpayer in the state of maryland. we represent over half the corporate taxes in the state. jeff: it is a tax now reminds hang. it goes into the education fund even if you lose money at least it is going to education. perhaps someday they will be smart enough not to gamble their money away. tracy: i am sure that is what they tell their spouses, i am helping the kids, honey. jeff: just by the girl scout cookies, it is a good cause even if you don't like the cookies. tracy: jeff flock, philanthropic. how about this for another gamble, maryland governor

implementing a rain tax. the storm management fee will be assessed based on square footage of structures and paid services at commercial and residential properties. environmentalists are plotting attacks saying it will help the state for the clean water act. critics say this and other financial burden for residents. how are you going to measure that? ashley: can you imagine if they had that in seattle? recorder until, stocks every 15 minutes, the new york stock exchange, interesting stat. four of the five top gainers on the s&p are retailers, what does that say about consumers? >> the consumers are doing what the fed wants them to do, they are out to spend. driven by consumer spending and driven on that consumption, that

is good news all the way around in one of the reasons into the market continuing to set new highs. that is the underpinnings of our economy and probably why we continue to set new highs as long as we continue to pump money into it. ashley: are you seeing money coming into other sectors? >> that'll be the important thing over the next two or three sessions. if we get confirmation of that, we will have a really believable rally 1600 on the s&p and the dow. what is occurring is now you have easy money policies in asia, confiscation policies on the depositors, all that money will be flowing into the u.s. markets into bonds, commodities, going into u.s. equities giving a further list to the market keeping us going for a while.

ashley: it is truly amazing and impressive. we appreciate it. tracy: coming up, a green jacket isn't the only green masters winner will take home. the masters by the numbers next. you will tell me why the green t is green, right? ashley: tradition. look at some of the winners on the nasdaq. we will be right back. my mother made the best toffee in the world.

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ashley: some breaking news for you, "wall street journal" reporting the judge has dismissed martha stewart's

motion with macy's. challenging stewart's right for nonbranded products with jcpenny's. so there you go. tracy: she is not happy right now. the deadline to file your taxes are monday unless you have not figured it out yet, but figuring what you owe on uncle sam on investment income is not easy. last time you were here we talk about how a lot of your clients created capital gains almost unnecessarily because they didn't know what the tax laws were going to be. >> or they only knew it was going up. they will see a lot of tax receipts next week from the accelerated income. tracy: they are different this year, lots more stuff on them. some of it is a very, some of it not. tracy: they are trul to be repog

cost gains, but not all of it is there. they are to report all proceeds, so some cost basis will be there, some won't. you have to go back your statements to figure out the cost basis for those that will stay. you get lulled into the fact you have 1099 package and i will bring that to my accountant, that is all i have to look at but a lot of information that is not on there that is relevant. love is helpful to you. pull out your last statement, your december statement. on bonds if you have a number of bonds in your portfolio, there's also accrued interest paid, so if you bought a bond or in the year, and he paid interest to

the person you bought it from essentially unless you bought it when it was issued, you reduce your interest income by the accrued interest you paid when you bought the bond. that may not be on your 1099. premiums, lots of people buying bonds they are paying more the current interest rate. if it is a taxable bond you get to advertise that premium which need to take a little deduction against the interest income you have on an annual basis. you can amortize it or take a capital loss when you sell it. you have to figure that part out. bring your statements, at least december statement with the 1099. >> i know your clients are all financial services. have to ask about this or postal, will it affect the industry? >> it is huge for the industry,

but we have seen the proposal being raised before. it is a very difficult thing to legislate, but i think if that is the industry you were looking to target, you've already gotten that in the changes in the tax law. because we have higher capital gains rate, 3.8% medicare tax, so that industry has already seen their capital gains rates go from 15 to 23.8. that is it, it is already happening. tracy: i wish we had more time. think you so much. ashley: the masters tournament underway. take a look at the tournament by the numbers according to "forbes magazine." estimated to be $8 million, not bad. the runners-up $864,000, the winner takes home a whopping 1.4 million.

jack nicholas with six green jackets. tiger woods and arnold palmer tied for second. a number of major victories. tracy: i'm going to say nothing. thank you. my mother would be so proud. i know who traded on insider information, fox business exclusive we are about to hear how it all went down. liz claman will get you all those details. don't go anywhere. all stations come over to mission a for a final go. this is for real this time. step seven point two one two. rify and lock. command is locked. five seconds. three, two, one.

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♪ >> insider trading scandal cracks open and major new details spill out. wiretag,