Hour. Anything kand often does happen in the last hour of trades. Stay with us. Well bring you all the details as they play out. It will been exciting close. Joining us ken mahoney, joe hider, Steven Parker of jpmorgan and lynn siindsey bell and our own rick santelli. Weve seen a growth bid this week. I have been talking about it all day. Consumer discretionary, tech materials. Is this finally the year for growth . Its been dzefensive for a while now . I think its a great sign for the market. Last year was a tentative rally. We saw things like utilities and staples leading. As yields were coming down investors were looking for other sources of income. What weve seen over the last couple week those cyclical name, the tech names, Consumer Discretionary names are starting to catch that bid and thats a positive sign. Is this normal for this stage of a recovery . Were in year six. Had isntthis isnt a normal recovery. A lot of what has been driving this is the yield. A lot has been focused on income generating parts of the market and now finally people are starting to believe that this recovery is for real. Thats why the cyclicals are starting to benefit. Is it showing up at all in the earnings situation . Oil stocks earnings dropped precipitously. Is there any other sign that growth is back . Actually since january 1st weve seen for the Fourth QuarterConsumer Discretionary, Information Technology and materials. These sectors have seen their growth rates improve the most. It goes its up with whats going on in the markets. We like it. Thats encouraging because bob was saying if we have a tilt to the market where people are buying the more cyclical parts, then where are all these investors who piled into stocks for the yield over the last couple years left to do at this juncture . They have to follow the rotation. Sgr joo thisthis past week theres been more confidence. The last couple weeks we have had the markets have amnesia. Wake up one more than dow futures up 200 points. But i think the investor is getting more confident. Its part of the bid were seeing. If that could start easing some of the International Concerns we could focus on the economy in the u. S. Rick, weve got the twoyear excuse me the 10year hovering around 2 this year. There is hope for the truce in the ukraine. What is motivating the 10year and whats going to move it in the next few weeks . Well i think especially over the last 24 hours that weve seen bund yields actually come to life a little bit. Theyve been rather comatose since the big january 22nd ecb meeting. Now theyre moving back down a bit back into the low 30s. And i think that now exaggerates the difference. The difference is close to 170 basis points. It hasnt been that wide since 1989. What happens when it gets wide . Investors globally end up looking at the one thats the farthest away in this case the 201 yield and they look to buy that. So theres a tug of war going on. As equities improve, yields should go up. Europe is pushing them back down. The feld is thed is the wildcard. Weve seen a lot of jump in Interest Rates since the 27 28 fed meeting. Even though its steepened, its steepened with short rates going up as well just not as fast as 10s and 30s. It brings up an interesting joint, joe. Its time for investors to leave some of the dferzefensive parts of the market the ones that could potentially continue to be affected like utilities if were headed into a different climate. I agree. I think its a Good Opportunity for growth stocks. We like smaum capll caps for this year. We think its an opportunity that this market will begin to accelerate and be a very track tiff year for u. S. Equities in particular opposed to last year which was not a bad year but a bit tepid at times. Now im worried about everybody agrees. Right. One thing weve been watching really closely is the advance decline line. The averages werent doing anything. Its like the troops were ready to go and the generals were just kind of stuck. That was a precursor to now the generals following through and now the average has gone with it. Were going to be watching advance decline line expanding and watch if it starts contracting. Thats going to be our tell for us. You get that he is stealth rallies going on. What about the more defensive sectors. Weve been talking about ewe tults. Utilities. Is there any reason for people to sear yuzly start moving out of those more defensive sectors. Kelly, you said we all have the same view but if you look at where the money has gone over the other side of the boat. Its not where money has been going. All the money thats gone in looking for yield without a lot of growth and earnings expectations for sectors like Consumer Staples or utilities, if rates keep going up, if Interest Rates move higher theres a risk you could see major outflows. Theres been a lot of shorting in this sector. The etfs have a lot of creation as professional investors go in and try to short the sector. You can see people trying to bet against them. Jo this is where the data will become so important. Rick its interesting because were leave in this scenario where it feels like were about to take a couple steps forward. Weve heard even people like bill miller on this program saying maybe we are close to the end of the bull run in the bond market, but people have heard that so many times, been disappointed so many times. I guess it just seems like the bond market that cried wolf. Well listen when i talk about rates maybe going up im just talking about potentially seeing if we could get up to where we settled last year at 2. 17 . Im not looking for anything large. As a matter of fact, i wont fight stocks. I dont fight stocks. I understand how it works. Christmas eve comes and the next day theres gift under the tree. I get it. Thank you janet yellen and mario draghi. I definitely do not think the fundamentals have improved since the second and Third Quarter since last year. I look at retail sales, i look at durable goods, the consumer. And then i think were still around 2. 5 gdp. I see german exports picking up. The whole globe is still kind of slow. If germany through a weak euro picks up it will come from somewhere. I think were all kind of beggaring thy maybe and i still am not address i have aggressive on the fundamentals. Rates might go up a little bit from here. We know that earnings have stopped going down estimates for the Fourth Quarter. Is there any sign here that investors are concerned about the earning situation inq1 where we are right now 1234. Absolutely. Earnings are supposed to decline 1. 9 for First Quarter. We havent had a quarterly decline in Earnings Growth since the Third Quarter of 2009 when we were in the middle of the great recession. Dont forget the First Quarter is also up against the easiest comparison in a really long time because last year First Quarter winter was bad, bad Economic Data. So i think the analysts are getting a little aggressive on cutting their earnings estimates. Theyre also following management teams who got a little caught off guard with fx and the oil drop. Butq q4 is turning out not to be so bad. We are all freaked out at the beginning of january and yet when the rest of the world reported, the numbers got better. 80 were beating. Exactly. Going into at the start of the quarter right before alcoa reported, we were expecting Earnings Growth of 4. 5 . Right now were at 7. 5 . Thats the standard beat you get every quarter. We could even do a little better than that. I could win a race if im running against people that are 90 years old. Come on. We really lowered Forward Guidance and expectations. Yeah. You know whats interesting, as were getting close to a record, the vix is elevated a little bit. Last time we were out the door at the record, the vix was hitting at 12 now at 15. There is some protection there is some even though were here theres definitely some tentativeness to it. Joe, what do you think drives the equity appreciation youre looking for . Is it going to be earnings expansion and are we just talking earnings per share or aggregate earnings or is it going to be a little bit of an increase in multiples . I guess those would have to be some of the more beaten down multiples. I think it will be a little bit of both of those things. I think that, you know the market doesnt like uncertainty, and i think whats going to help is low cost of energy. We seem to have stabilized there. So all in all, i think thats going to drive the equity markets upward. I think well get the same kind of Earnings Report 80 was early mentioned in beating expectations. We want to note the s p here is at an intraday high of 2093. Stephen, just tell us what could derail this little stealth rally weve been having . What or the rotation rally. I think theres a couple things. I think, one, we have seen a little weakness in some of the Economic Data over the last couple days. Weve seen the tick down in things like consumer sentiment. I think theres also a lot of policy and political risks out there. Weve seen what happened when you get questions around greece or whats going on in the middle east. And after a rally like the one that weve seen anything that can shake some of the confidence thats led to this rally and some of the growth sectors, you could see that reverse quickly. The full growth outlet is still strong and were positive on stocks. Ukraine and greece still very tentative. And there will be a long weekend for investors to think about those. Well leave it there and let you enjoy your weekend. Thank you for being here. Really appreciate it. 50 minutes to go. The s p 500 sitting at all time highs. 2093, the dow just over the 18,000 mark about 40 points still shy of its high. The dow is up just about that amount today. 38 points. 5 on the s p and 27 on the nasdaq. Check out the chart of one of the most popular funds in america. Its socalled spy and attracts the s p 500. Its the etf, the biggest one in the world. Its nearly doubled over the last five years. Well have a bull bear debate on whether the spy is a musthave for your portfolio. And up next, the Federal Reserve and the Republican Party . Whos courting whom . Its valentines season so the pros will weigh in on a brewing romance that could affect your money. Were back in two. Your moms got your back. Your friends have your back. Your dogs definitely got your back. But whos got your back when you need legal help . We do. Were legalzoom, and over the last 10 years, weve helped millions of people protect their families and run their businesses. We have the right people onhand to answer your questions backed by a trusted network of attorneys. So visit us today for legal help you can count on. Legalzoom. Legal help is here. Theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe the gap will close when healthcare changes. When frustration and paperwork decrease. When healthcare becomes simpler. So lets do it. Lets simplify healthcare. Lets close the gap between people and care. At ally bank no branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. My name is tony sartorio. Im a lineman for pg e out of the Concord Service center. I have lived here pretty much my whole life. I have been married for twelve years. I have 3 kids. I love living here and i love working in my hometown. At pg e we are always working to upgrade reliability to meet the demands of the customers. Im there to do the safest job possible not only for them, but everybody, myself included that lives in the community. Im very proud to do the work that i do and say that i am a lineman for pg e because its my hometown. Its a rewarding feeling. Welcome back. If you hadnt been paying attention, let us be the first to tell you the s p 500 trading here at a record high 2,094. It has to close to be a record closing high. The dow is having a pretty nice day. Its up 45 points for its part. Over 18,000 which would be its first close there this year. Of course were still waiting to see whether it can add another 50 points or so to close at a nominal high for that index, too. Dominic chu is corralling the movers for us. Its almost like herding cats so lets kick things off with shares of big gaming and casino stocks like las vegas sands, wynn, and mgm. Theyre being helped along by Morgan Stanley which says positive Airline Capacity trends into las vegas could bode well for gaming and hotel revenues. Energy shares also generally positive today on the heels of higher oil prices. The best performing sector in the s p 500 but a notable exception is offshore drilling contractor seadrill. Theyre cutting their order backlog by 1. 1 billion due to continued problems at a brazilian staterun company. Lets end with american express. Shares are down 3 after losing 6 yesterday. Thats after it said it would no longer be the warehouse retailer costcos exclusive credit card partner partner. Bank of America Merrill lynch analysts cut their target to a sell. Ouch. Thats been one to watch. Thank you. The fed supposed to be an independent agency but theres a heated debate about how politicized the institution really is. Senator rand paul out campaigning for his audit the fed will. The fed is reportedly courting republicans to talk people out of voting for it. Here is what Richard Fischer said about it yesterday. Take a listen. These are sheep in wools clothing saying they want to interfere with Monetary Policy and i would ask your viewers the following. They cant even get a budget together. Who wants congress to run budgetary policy and the answer is nobody. Here to discuss the fed a jim which jimmy and greg. Thanks for joining us. Greg, are there really signs the fed is worried about this now that the republicans control both houses and are they really conducting a bit of an Outreach Program as has been reported . Well of course theyre worried. I dont think it has anything particularly to do with the makeup of congress. They would be worried in matter what party this was coming from. Theyve done this in the past when these audit the fed movements were catching on and im not surprised to see them doing it again. Youve seen j. Powell in particular, the republican one i think hes the only republican governor on the board of governors out there taking the lead being very very emphatic talking about this is a bad idea. And, ieryes, the feds Congressional Liaison office has hired a couple republican staffers. Its what you would expect to see, an agency that thinks its at risk of being left behind in the legislative process wants to make sure its voice is heard, that theres no questions left unanswered by the people who will make these decisions. And it seems, jimmy, i remember one of the recent reports i read put perhaps as high as twothirds chance this bill gets passed. What do you think the odds are . The Federal Reserve wasnt that long ago republicans kind of liked the fed. They really liked paul volcker beating inflation. They like greenspan in the 90s, didnt raise rates despite a fast economy. That has completely turned around. The antifed level i dont think you can underestimate how much republicans they dont like the fed. They blame the fed for the financial crisis for enabling obama budget deficits. And, i mean use that valentines day theme. I think the republicans, they have an eye on another woman. A european hottie called the ecb. Thats who they would like the fed to be like a very tight money, inflation obsessed central bank. I think its been terrible for europe. I think it would be terrible for the United States. Greg, can you clarify for our viewers exactly what the audit the fed really means . Is it retroactive where you would be auditing essentially the feds decisions or proactive where they could basically have to consult can congress before they did anything that was really important . No the bill would not require them to consult with congress anymore than they already do. Essentially it removes a provision in the law that governs the General Accounting Office or i should say the Government Accountability office and says the controller general would now have the freedom to audit anything at the fed including Monetary Policy whereas in the past that was strictly off limits. You might say whats the big deal . He audits practically Everything Else in the country, why should he audit Monetary Policy . The fed is worried about it because everything you need to know about Monetary Policy is out in the open. The only additional effect that having this ex post review of their decisions can have is to chill them and mick it clear to everybody making a decision in that room that what theyre thinking about and deciding will be second guessed and exposed to congressional scrutiny. How do you think it would play out, lets say for the sake of argument jimmy, it does pass and for some reason isnt vetoed by the president. What would it mean in practice do you think . I think youd have a Federal Reserve that would feel intimidated by congress that could conceivably, again, have all their discussions exposed in real time. I think you have a fed focused on what congress is saying about them and also the longterm viability of the instugitution as an independent central bank. That independence can be taken away. Theyre going to be far more likely if theyre being audited to try to please their congressional masters. I think the end result would be ruinous for