Improved. Its the talk of the town. Even as Inflation Numbers go up, its counterintuitive. Is the stock market bracing for a curveball that it wasnt expecting, a report showing a big jump in inflation on the wholesale level is raising those eyebrows and concerns that if inflation really is starting to rear its ugly head it could change everything for stocks and the economy. We will take a closer look at that story coming up here momentarily. Also ahead, more problems over at the irs. Paying out 13 billion in tax credits to people who werent qualified to get that money. The problem so bad that one in four payments shouldnt have been made, and this has been going on for years. Why hasnt it been fixed . Larry cud lowe is coming in and weigh i weighing on thoughts. And the flap over flappy bird. So addictive that its young vietnamese create ore pulled the game because the pressure, he says, was running his life even though it made him a multimillionaire almost overnight. What was he thinking. Well, that creator will tell us. He joins us today in an exclusive interview to explain why he did what he did and what his plans are to the future. Im really looking forward to that. How about you play him in flappy bird and say i try not to Start Playing because i apparently would never stop. Understand. Speaking of starting and stopping. Heres where we are in the markets right now. The dow is down 87 points this hour. The nasdaq is off by about 22. The s p 500 is down 7, and the real story, as ive mentioned, is the fact that the tenyear treasury rate keeps moving lower, bill. We may be talking about Mortgage Rates going below 4 again. Well see what happens. Lets talk about it. Jack bouroudjian from index financial partners, Keith Fitzgerald from money map press, and our own rick santelli. We think others will join us shortly, but they like to be fashionably late to some of these events. Ill start with mr. Market. Rick, riddle us this. Inflation numbers came in pretty hot for the second month running and, of course treasury yields fall. Whats going on . Well, imagine the cubs win five in a row. Theres your strong inflation data, does it really change the outhook for the fact that the cubs arent going to be in any october playoffs, okay . I think that there are issues keeping treasury yields down that at the moment are actually bigger than inflation picking up a bit, and i have one question, kell, before i continue. What macro data other than the jobs numbers are you considering are really good . Well, if i wanted to paint a picture about the economy picking up momentum id do it in the following way. Consumer confidence numbers are the highest consumer confidence, thats not a hard number. The jobs report last month. Whats a hard number . If you want to talk about the four sort of pillars, take the nbr which looks at Business Cycles and they talk about whats happening with industrial production, pretty steady gains, a lot with the caveat of what happened in january. The toptier data, the real data, is the retail sales, the gdp. Even the retail sales the month before last was okay. Exactly, exactly. Theres a fourletter word thats appropriate. Fits and starts, fits and starts, and thats one of the reason. The globe has been on the wrong side of the trade, but anybody who thinks this is just short covering, its been so orderly since january 1st, twoway market. Bund yields at 137, and french yields at 180. And thats why i wonder if its europe. If you have the bund out there indicating that the ecb might be moving next month, do you think that news today is whats helped push rates here in the u. S. Down . Do you really think that we can be great can we be great and europe be horrible . Know the relative answer here. Oh, were better than europe, okay. Well, the cubs are better than a Minor League Team but that doesnt really say much, okay. So to me we see all the answers, but see the stock market and were not objective, in my opinion, about assessing whats going on or what the bond market is trying to say . What were you going to say, Keith Fitzgerald . Im with rick. Theres a fourletter word and thats risk. What trade remembers all about, whats going on with the ukraine and data because there isnt a single data point, this is all about uncertainty and the fact that traders why when the ukraine situation seems to have deescalated for the time being, when jobless claims are improving, why is it now that were seeing the rally in the treasury space . Well, again, traders are very, very specific. They dont care what policy womks do, what putin and they dont care except whats going on in the market. They dont want to risk the uncertainty of having a fed making things up, sta statistics measuring the wrong stuff and having Economic Data that feels good but is not yet a trend. Jack bouroudjian, youre very quiet so far. You know what, because ive been waiting to jump in. Its not a fourletter word, its a fiveletter word, its wrong. The bond market has been wrong. Its been wrong for the last five years. It was wrong last may. In fact, a lot of what were seeing what do you mean wrong . Think of it this way. Are you saying that stocks the signals that are being sent by the bond market are indicative of a recession looming. We are not seeing the stock market a recession. Hey, jack, jack, look at corporate earnings. Are you seeing the numbers im looking at, corporate profitability about as high what are the facts in the facts are that we have a low Interest Rate environment. Weve got corporate Balance Sheets that are healthier than ever before and alltime highs in the stock market. You know what that is, thats good. Thats not bad. Thats not bad. What are you looking at right now . Jack, jack. One at a time. Rick, go ahead. Caracas is up 200 over the last year, jack, okay . Its not only about the price of stocks. Theres a lot of other things that go into the mix, and we are well above the 140 historic low in 10s and way above the 160 a year ago may. Those are recession levels and if you want to see recession, just maybe wait about seven or eight months. We saw a rate down to 1. 8 . We kept people out of the stock market and we saw the stock market rally 200 s p handles off of that. We didnt keep people out of the stock market. A lot bought and paid for. That 1. 8 in the tenyear yield kept more money on the sidelines because they were worried about what was happening with the economy. The bottom line they had a better return in your stock market yeartodate so far. Let me add bob pisani in here for a second and bob, good luck. Down almost 100 points now so whats with the selloff all of a sudden . Look, im with jack. Im a Glass Half Full guy, but i cant help but think the bond market is on to something here. Look, at this point in the whole cycle we were supposed to having the central bank sort of moving away from the stimulus and passing it on to a stronger global economy. What do we see . Bank of england is talking about keeping rates low for several years. Ecb is talking about lowering rates at this point, hardly indicative of ending stimulus and dovish economic policies, and we have some disappointing Economic Data. So far im i want to see the numbers get better, but i havent seen really anywhere near just a skate philosophy but what i would say pretty mediocre growth in the economic fund. Rick, is it possible that part of the dynamic here is the supply side because the u. S. Deficit has improved so much that the treasury is issuing more inflationlike notes and the supply of bonds out there for people who want or need to pick up yields say in this space just isnt meeting the demand, and thats whats pushing rates lower here, is that possible . Oh, its definitely possible, but keep in mine, youre playing a dangerous game here. Yes, the deficits are way smaller than the first term of this administration, but still larger than any Previous Administration so youve got to watch it. So need to know the role in history. It is an issue, i get it, and the dislocations of the Central Banks. You know, kelly, the fed and the Central Banks of the world bought all the good paper, so, yes, another unintended consequence. I think youre going to see Interest Rates and equities in the economy out of phase for years. Theres going to be a point where if the inflation data keeps showing up, two, three, four months down the road, could you see a huge spike in rates that doesnt coordinate with any fundamental aspect of the economy and thank you, Central Banks. David kelly joins us from the jpmorgan global funds. Pondering why yields are going lower even as the inflation data, for example, comes in hot here. Lets be clear. This is not ukraine or geopolitical because the vix index is so low. Not worries about deflation because gaps about nominal bonds and tips is pretty high. And its not recession worries. What this is is a mismatch between supply and demand for bonds. Threequarters of the people who hold u. S. Treasuries dont care about the price, you know. Federal reserve, foreign Central Banks, Mutual Fund Owners trying to rebalance their portfolios, Pension Funds trying to match longlived liabilities. To paraphrase mickey cantor, its not about the economy. What does that mean, david . If thats going to be the case, what does it mean for stocks and what does it mean for the economy Going Forward . It means its a dove signal. The treasury market is telling you nothing right now and you have to go back to look at the economy and where earnings are going and that will tell you the true direction of the stock market which i still think is up. Wow. That got everybody quiet all of a sudden. He was right for the first part. Youve got one of the most crowded trades right now where youre long u. S. Treasuries and short european debt. When that trade starts to come off the velocity who is short european debt . Everybody. Every major marketmaker. They are selling the spread, but they are not short. Come on, rick, you know whats going on. Theres no way, guys, no way. David, guys, hold on one second. David just made a great point. Made a great point and one thats going to be very important Going Forward. Rick, if thats the case, i mean, perhaps you cant trust the signals come out of treasury market or forget about the signals or perhaps rates will be structurally lower here for quite some time. Well, you know what . I think that last guest really nailed it, that there are deep pockets. Theres liability asset issued out here where Pension Funds, insurance companies, they are. They are going to hold forever, and i agree with him, but i think where he gets a little bit off the track is that if you monitor all the big number releases and you watch how treasuries and world fixed income react, they react in logical ways like yesterdays weak retail sales so i think its all of the above. No. Got to go, bob. If the cpi is along stronger and parallels the ppi its more cooked than a christmas goose. Could be over 2 for the first time in some time. I dont know who just happened here but it just happened. Thank you for all the participati participation. David, good to see you. Were headed towards the close. Dow is down 96 points, pulling back from the alltime highs weve been hitting earlier this week. Sears is looking to sell its 51 stake in sears canada. What then becomes sears of a company as a retail chain, we should say . Will it survive . Well talk to some retail pros for their list of retail hopefuls aside from sears coming up. Also ahead, dont be evil. A group of activist shareholders pushing googles board to practice what it preaches in that regard when it comes to paying taxes, but the question is is it evil for google to legally avoid paying as much in taxes as it could . A lively debate just like we had is still ahead here. Plus, the Internal Revenue service goofing again, this time paying over 13 billion in improper tax credits according to the interim watchdog. Our larry kudlow weighing in on the mess. Keep it right here. I make a lot of purchases for my business. 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Joining us is David Garrity from gba research and robert lewina from sure vest Wealth Management who, by the way, is a google shareholder, and you say its legal, why not . If these laws are available to them to lower their tax base, and right now its down about 15 effectively, you say okay, its legal, right . Well, thats absolutely it. Its not googles responsibility or even within their capabilities to set global tax code. What is in their responsibility a is to maximize shareholder value and part of maximizing shareholder value is operating as efficiently as possible within that code. I mean, im a wealth manager. Our clients come to us to preserve and growth their wealth, and part of that is making sure that we minimize taxes. Were not taking shortterm capital gains, using appropriate accounts, so as a shareholder i think everything they are doing is completely right on and the idea that they are somehow evil for this is somehow ludicrous. So, robert, what about you . David, what do you think . I think its interesting here. We have to look at google which is a company that has indicated in its philosophy that they essentially want to operate in a way which basically shows they are good citizens, that they basically think not just about the short term, whatever, you know, robert might have to say about that, but they look at the longer term and think of themselves in the context of stewardship. I think you have to look at the news today. We had the ceo of ibm who said at the end of the Analyst Meeting, im not just a ceo. Im a steward, and what you look at when you look not just at google or ibm but you also look across other companies, and they do rely upon certain common goods that are provided to them by the governments of the country where they operate, an education system, research and development grants. From that standpoint one might make the argument that maximizing the short term is extremely short sighted. Obviously i wouldnt want to draw any parallels between corporations liking that and cliven bundy basically grazing cattle on federal lands without paying fees for 20 years but if you go far enough there isnt much difference. Robert . The problem is the implication with that is if google pays more in taxes, that global governments are somehow going to take this money and somehow are going to create a better life for the citizens, and i think thats crazy. Thats never paid out before. What creates a better life and corporate governments is when people have jobs. When people have jobs they feel valued and good things happen. By google paying more in taxes is ridiculous. I spent time out on their campus with management, in everything from brand new employees there, the thing that google is doing in that community to support local community, interest to their employees and charities is far more than most companies are doing, so, again, i think this is the wrong company and the wrong argument to have with google. Robert, what if it were a Different Company so if there was another tech company out this doing all these double dutch, whatever you want to call them, setups, to book revenue, you know, to keep it offshore and then not bring the money become and reinvest it in this country, whatever you want to call it. If it were a Different Company would the same principle that youre talking about stand . Well, i mean, look, i think every individual and every corporation at some point has some type of moral obligation to give back to their community, but i think theres limitations with that, so when youre looking at google, like i said, they go above and beyond. If you have a company thats absolutely just draining the local community there, i probably would have a different argument, but like i said, thats not google. If you know the company, thats not what they are doing and everything they are doing is well within their rights, and i think they are a good steward of shareholder capital, and i dont think this is the right argument. Good stewards for here. Dont publicly traded companies have a fiduciary responsibility to their shareholders to do what they can on the profit side and the tax side to try to maximize shareholder value in any way they can . Certainly there are fiduciary obligations and duties and with corporations its basically resulted in very shortterm earnings or profit maximization. Ive been ceo of a public company. I know what it means to basically try to manage yourself for Quarterly Results to make your numbers all look good. Here in this context, you know, you might want to be looking at some of the private companies. Might lock at what someone like Warren Buffett might say about what it means to be operating in the context of the u. S. Economy and how important it is to support these common goods that benefit not only that company but others. I think the other thing that robert neglects to look at is that there is basically reform taking place within the context of the g20 and the oecd to basically b