Best day of the year, the dow has to add more than 198 points. Its 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. Weve 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. Lets 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 . Its a chance to buckle up because were 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. Its looking more likely tits going to be a difficulty want diplomatic struggle. The ukraine is still approaching bankruptcy and the most important thing were 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 thats 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. Its so interesting, dick, were 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 were going to continue to experience volatility, especially in reaction to Something Like whats happening overseas in ukraine. I think those are going to be short, shallow opportunities, wont 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. Well 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 id make is there is no panic buying. Were not seeing skew levels shoot up. Were 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, isnt it . Low volume. Im surprised you didnt 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 arent quite as heavy . Is this the new normal . Sure. It very well could be. I think what youre 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, its 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 thats going to be harder for the european zone because theyre 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 theres 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. Lets bring Rick Santelli in here. If its up yesterday, its down today and vice versa. Does that mean its over . How do you read the market response . I thought yesterday it would be over. Listen, whats 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. Doesnt mean its 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 dont think weve 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 were probably going to have a tale of two markets. On good data stocks are going to fly. On bad data theyre not going to sink much because theyre going to blame weather, but its 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, youre 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 its pork or whether its beef or whether its 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 havent looked at the activity yeartodate 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, lets look at treasuries, lets 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 thats out there showing theres 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 theyve seen great returns over the last year and they dont want to miss out, theres still an abundance of cash in the market until, you know, we still got things happening in the United States and theres a lot of cash on the Balance Sheets of companies and in individuals accounts and theyre 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 arent we talking about complacency . Were all taking this for granted taking it in stride. Im not saying were taking it for granted. Were taking it in stride. The geopolitics, this is very important stuff, and now were talking about how the markets are feeling like its all over at this point. It may not be, but theyre acting like it. Isnt that classic xlcomplacenc . Absolutely. But the problem is i feel a little bit like the option strategist who cried wolf because weve been talking about how low options volatility has been for a long time. Weve 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 its a question of fear of missing out versus fear of downside. I dont blame people for wanting to be complacent here because the idea of missing out is so much more of a greater fear right now. Isnt 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 theres not a lot of lennage agleverag system. Its march 4th, were coming up on the fifth Year Anniversary of the bottom of the market. Were 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 theres 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 yeartodate. A lot of our clients who are near retirement, in retirement, they need income in their portfolio. Theyre starting to gravitate back there now that we see a little more stability in Interest Rates. As rick pointed out, weve seen a bigger change here today, but we think theres 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 were in the middle were in the beginning of a consolidation in that industry. So i think thats 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 dont succeed, try again. That has been the president s motto when it comes to the federal budget. Hes trying again today. Well 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. Were 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. Well find out coming up. And hes just days removed from serving as the ambassador to russia. Michael mcfaul has gone eye all to eyeball with vlad peimir put. Did putin just blink or did he wink . music defiance is in our bones. Defiance never grows old. Citracal maximum. Calcium citrate plus d. Highly soluble, easily absorbed. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. 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 theres much less likelihood we will see tanks rolling through kiev which they seemed to be pricing in yesterday. Weve 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 thats used as a hedging vehicle. I see a lot of people coming into the market using the small caps. Across the board gains, its very unusual to see nine out of ten s p sectors up more than 1 . It doesnt matter if youre defensive names or cyclical names, health care, financials, industrials, it doesnt 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 tenyear. This is not signaling somehow Economic News is better. A lot of the naysayers down here, and theres a few of them left, keep saying watch the bond market. Thats the one thats 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 obamas 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 thats 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. Its not going to be realized this year, but hes 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 its 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 were 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 highincome 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. Its 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 obamas budget, everyone is saying its dead on arrival, you dont need to worry about it. Frankly, it does feel as though were seeing an emerging template for tax reform. In your view what could come out of this in the year or two ahead . Youre right. If youre looking for a Silver Lining on a day when generally speaking youve seen the president propose what is a budget thats really not going anywhere, the Silver Lining is whats happening on tax reform, and its 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 post9 11 defense posture. We need to reexamine our military Industrial Complex and how were going to budget for it in the future. And so i would agree theres two Silver Linings even though the debt is exploding. Were talking 4x leverage debt thats being brought onto this budget, and thats really unconscionable. Jared, lets face it, the president merely is planting a flag for an Election Year with this document. Hes not really expecting this budget to pass any shape or form, is he . No. But id say its more than planting a flag. Id actually agree wit