At costco. Their Earnings Report is out today. Very interesting. Is it a canary in a coal mine for the question of whether well see more inflation down the road . Costco said pricier merchandise. What they have to pay for the merchandise ate into their bottom line. Is that the biggest sign that inflation is about to hit the average american more than it already has. Well look at that later. It is all about how they pass those costs on. Thats an important debate. But were also going to talk about comments made by blackrocks larry fink. Hes rattled the Exchange Traded funds world by warning that the enstir industry entire industry is at risk. Well ask a chief invest. Ment strategist at wisdom tree if hes just as worried as larry fink is. Right now we had a little pop in the market about 20 minutes ago. Took us to the highs of the session. The dow is up 51 points right now. That is the high of the day. 16,684. Again were about 30 points away from an alltime high there. The nasdaq is up 20 points now. Were at 4,245. The s p is in record territory with a gain of nine points, 1,918. Were seven points into record territory. Lets talk about it in our Closing Bell Exchange today. We have cnbc contributor Heather Hughes with us. Jim lowell from advisor investments. Rick santelli joins us as well. Gang, let me show you a couple charts to get this thing started. We all talk about how volume here at the New York Stock Exchange has continued to move lower and lower, even when were not in a holiday period. This is a chart of the New York Stock Exchange volume, compared year or year for month by month. Were roughly down about 11 to 12 year over year this month. Right . Thats right. Okay. Now, i asked our research staff, if volume in the stock market is going lower, where is volume going up . Guess where it is going up, rick santelli. This is the treasury yield for treasuries between 7 and 11year maturity. Look at the spike this month so far. This is volume . This is volume. Its 7 to 11 years but this is the chart that would capture any activity in the trading of the 10year bond which of course we have seen a big rally in that exact note and of course, yields just going down. People are surprised that they keep going down. David kudlow, why is the yield going up and why is there so much interest in the 10year . That volume speaks loudly, dont you think . You mean why is the yield going down on the 10year or up . Why is the yield going down and why is there so much volume going into the treasuries right now . I think there is a lot at work. I dont know how much we can attribute to economic activity. Weve had gdp a lot. Revised down more 10 today. We know there are more forces at work. U. S. Treasury is still the safest investment that exists. With uncertainty around the world, ukraine, it is a flight to safety bid but theres also, we look at what might be a shortterm supply demand imbalance. Weve had deficits coming down. Theres been less issuance. And at the same time, we have these stories about massive buying by china and maybe to a lesser degree we have Pension Funds and institutional Money Managers that had a runup in their equity allocation because of the great stock market of 2013. So not one single issue thats pushing them lower at this point. Heather . I would say before inflation and taxes even i dont know who would want to own those. But i guess the point is relative to other global countries around the world, you look at sweden, canada, germany, france, they all yield less than 2. 5 on their equivalent 10year bond. So i guess from a relative standpoint, thats why youre seeing some thirst for yield in the u. S. Bond markets right now. Even spain and italy are less than 3 right now. But guys, it begs the question of why some of these safe havens are actually doing better than some of the other riskier investments. We have talked about the fact that weve sort of corrected from what was a risk off trade that started in march. But the fact that treasuries are still doing so much better than some of the other Corporate Bonds and some of the other riskier investments, meanwhile gold is down, too. It doesnt seem like a traditional safe haven market, rick. Well, first, i dont think it has anything to do with safety. If you walk down in your basement and its got three feet of water and you see a broken pipe, would you go ask your neighbor, hey, did it rain yesterday . Or did you water your garden . The reasons for why rates are down are so obvious. Sorry, ukraine flight to safety, not buying it. Were talking centuries low yields in some countries in europe. It is low because the horsepower of the economy is low. Heather hughes, why would anybody buy it here . Maybe for 15 , 16 total return . Year to date . And to think we could have negative Interest Rates one week from today in europe so dont let the zero line fool you in price appreciation. I continue to say that minus 1 two quarters ago wasnt in the cards. Blame it on weather. Blame it on the cubs. Blame it on whatever you want. But for the most part, im sorry, but i bet you i bet anybody there that the total gdp for 2014 when we know it will be less than 3 . A bag of white castle to anybody willing to make a bet. You have the bond vigilantes have won thus far this year but i would say it is the doom and gloom predictions, right, that have kept people db millions out of the market. Not doom and gloom. I think it is realistic. Im looking at this mornings data. What are you looking at . Fine. Fair enough. Im just saying over a longterm perspective i think there are millions of dollars still in the bond market. 1. 2 trillion since 2006 what makes people think you cant heather, rick forget about the longterm perspective. Look, todays gdp number was an absolute gift for mega cap stock investors inside that number, we saw weather impacted data hitting companies who derived the ply onlions share of revenm their exports. I think todays gdp report was excellent news for those of us well diversified and focused on battleship Balance Sheet names. You can find them in a fund Like Fidelity mega cap. Obviously business spending remains weak but Consumer Spending remains strong and it ticked up 3. 1 . Thats better than not half bad. Rick, ill take the opposite side of your bet. I hope to be able to eat a hamburger and watch you get a little bit hungry across the table. Hold on white castle, here we come the sliders come in sacks, not bags. Just so we get our nomenclature correct here. Let me add another voice to this discussion about where we are and why the treasuries are doing what they are doing. Earlier today on cnbc on street signs, pimco has rehired paul mccaulay. We all remember him from back in the day before the financial crisis. Hes cut his hair, hes shared, he looks like a normal person again. Heres what he said about the current climate were in right now. I dont think the worlds upside down. I think the world is pricing in and coming to grips with the fact that post the minsky moment, which was 2008, and postfive years worth of healing in the economy and in the Financial Markets and in the banking system, that were on the cusp of emerging from a liquidity trap, and that the fed and other Central Banks around the world are going to be exceedingly low on shortterm Interest Rates. It is a brandnew regime. We are calling it here the new neutral. Rick, the new neutral. Were going to be in this for a while. You must be thrilled. Well, listen. I have Great Respect for everything pimco and mr. Mcculley. I dont know i want to swap Trading Cards with them. So everyone is entitled to their opinion. Jason, we havent forgotten about you. Maybe he doesnt want to add his voice. Maybe hes just enjoying the show. I think this discussion is exactly whats going on in the marketplace. What i also think is kind of the story that some investors are missing from a longer term play here. The reality is that they are going to hold Interest Rates low for quite some time. Rick is exactly right on that. Gdp growth is slower than it should normally be. Hes exactly right on that. I dont know if it is necessarily dooms day scenario but it is probably in the range of 2 , which is not really all that good. But at the end of the day, it doesnt really matter if rates are going down or up a little bit on that mark. Investors in those treasury securities or the government bonds the bunds in germany or internationally in many of the developed markets, theyre not getting the bang for the buck there. Theres a good so jason, jason they may get a return on a shortterm basis, but longer term, that return is going to turn out to be big surprise 2 . And 2 s going to be easy to beat by pretty much Everything Else out there, including equities. Stock markets barely have that number beat now. You seem to be siding with a couple voices we had on today from the fed saying yes, there are a lot of compounding factors in the First Quarter gdp that led it to be negative. But the snapback will be real. And if you believe that thats real. Reporter will you put your money, if not in the bond market . So our investments we are taking some credit risk here and there but are really placing our money more in equities, and even more in International Equities where the discount still is. The u. S. Market we think has gotten a little bit expensive. We have were being very selective across the board because we dont think all risks are equal but we think this is an environment with rates as low as they are that it is justified to take some risk. But you be selective along the way because some of the things are overpriced and you wont get exactly what you want out of those that are overpriced. You get a lot of bang for your buck in the u. S. Mega caps. Large caps. Jim lowell pounding the table for the mega caps there. So noted. Thank you, all. See you later. We have some developing news right now. Kate kelly has that. Thanks so much, bill. John mack, former chairman and ceo of Morgan Stanley whose resignation from the russian oil drillers board was announced earlier today, says his de departure today says it has nothing to do with the trouble wi with anything else, no bearing on Morgan Stanley, his former companys attempt to sell some physical oil sale assets to ros nflt eft. A deal thats still under way. The bank hopes to complete it by september but it still needs a crucial approval from u. S. Government regulators. More details on my talk with mack and the surrounding context on cnbc. Com any minute now. Back to you. An important story. A lot of u. S. Oil companies are watching what happens here because they have a lot of interest in actually how that plays out. Yes, they do. A lot going on politically and economically. Lets head to the close here. 48 minutes left. Were up 48 points on the Dow Jones Industrial average. It is the s p thats back in record territory right now with its gain of 8 1 2 points. Unemployment is something weve been watching. Jobs numbers are out next friday. Could it go below 5 a year from now . Really . Thats the surprising forecast of dun bradstreets ceo published in the Harvard Business review. Hes here to defend that position next. We sure hope it happens but is it likely . Thats the question. Also ahead, is whats bad for costco also bad for the rest of us with higher costs affecting the warehouse clubs earnings, the pros will weigh in on if this is a red flag on inflation. And another day, another analyst move on twitter. This time upgraded again. 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Your ticket to a better nights sleep the Unemployment Rate could be on track to go much lower in our next guest is correct. Our next guest says hiring could accelerate next year that unemployment could fall below 5 next year. He wrote about that in the Harvard Business review. He joins us along with our own jeff cox who wrote a scent cal piece on 5 unemployment on krpt nbc. Com. What will spur this growth in jobs over the next year that you saw . Thank you. This is going to be really driven by Small Business growth and we havent seen that in the recession and thats one of the main reasons why weve had this jobless recovery. Small businesses now have access to capital and it is that capital expepd tur thats going to help them to bring in more jobs. Were seeing that with the surveys that were now putting out. But jeff, i just wonder. We also havent really seen a lot of cap x expansion on a large cap side either as they try to maximize their Profit Margins, weve gotten to where they arent spending to hire all that much right now. Do you think that large caps and small caps will play a role or do you think these mic microbusinesses will do so much hiring that thats how we get there . It is a great question but it is primarily driven by these microunder a Small Businesses. Bigger businesses that already done that capital outlet over the last two, three years and now you are starting to see that slowdown. Those cycles typically happen in economic recoveries. Jeff cox, youre not buying it. No. I have three problems with this analysis. I hope hes right really. But number one thing, i dont think can you have a serious conversation about the jobless rate in this country without talking about the Labor Force Participation rate which we know is at about 35year lows. If jeffs analysis holds true, it has to go even lower that. I dont think thats realistic given how we low with. I dont think hes giving enough credit to Small Business job creation so far. Two times as many businesses with fewer than 50 employees are creating jobs than the larger firms. 2. 5 million of those Small Business jobs out there. Third, i wonder why jeff did not include any conversation about the fed in there. If his analysis holds true that janet yellen is probably going to have a nervous breakdown because she just wont know what to do policiwise. Ill take your third point first. The fed has a range. In the ranges, they go as low as 5 . Trust me, they might be nervous about this but i think it is going to be nervous excitement. This is good news for everyone. With regards to i think their projections for next year, 5. 6 to 5. 9 . I think it is more the point that this counter trend going on, number of people who have just given up looking for a job, this group of people who, for whatever reason, have been out of work for so long that they just have dropped out and theyre not counted teens or parttimers who dont want to look for fulltime work. Or are close to retirement. Thats essentially learned helplessness. What happens is when supply matches demand, those people come back in to the labor force. I think that that is a very, very valid point. However, i think what youll see is more and more people coming in to the labor pool as that labor pool expands. And that happens every time you have a recession in a recovery. The biggest cause of longterm unemployment is skills mismatch. I dont think were addressing that. I think that this optimism is misplaced to just think that these jobs are going to magically appear and were going to be able to match workers with whatever these jobs whatever quality they are. I just dont know. Jeff, i have one final question which is, even if we get to 5 unemployment, we still havent made up all of the jobs that we lost in the recession. Were still getting there. So im wondering when you think we will be at breakeven from the recession if were not even there yet, even if we dont get to 5 . What is your data showing you there . Look. 5 alone makes a huge dent in the unemployment numbers but you are exactly right. We were well below that point after the recession. The good news is if the trend continues, we will see an acceleration in job growth, which means as we enter 2015 and 16, were going to see those numbers continue to go down because Small Businesses employ a different type of labor pool. Back to the earlier comment, again, big businesses have the discrepancy between quality of labor and skill set. But Small Businesses dont. If Small Businesses hire, they hire more than half of the job seekers in the United States, we will be able to match that skill set. Well come back to you in july 2015 and face off again. We certainly hope youre right. Thank you, jeff cox, as always, good to see you. Heading toward the close. About 40 minutes left in the trading session here. Nice little move up. 54point gain for the dow. The s p back in record territory. The nasdaqs had a pretty good move higher. Pretty close on the dow. Well keep an eye on that for the next hour. Wisdoms chief investment strategist gives us his take on the markets and where you should be puttin