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S p finishing just shy of a new record high and im make the case that a strong dollar goes hand in hand with a strong stock market and rising investment returns in the economy. But its not all good news out there. Detroit, take a look at the new man in charge of your money. Governor rick snyder naming kevin orr as emergency manager for the financially distressed city. I think bankruptcy and busted Union Contracts are the only answers, i will speak to the kwov nor and mr. Orr about their chances and president obama, very interesting things to tell republican senators this afternoon. He says hes for Corporate Tax reform and willing to push fellow democrats on entitlements. Is the Charm Offensive starting to pay off . The kudlow report begins right now. First up tonight, a nice 83point move higher for the dow, makes it ten Straight Days of gains. We have details of another day of record highs, good evening, ka kayla. Reporter jobless claims fell unexpectedly and gave traders more confidence in growth. The dow sitting above 14,500. Up 83 points to 14,539. This month the dow has been up nearly every single day. The s p within four points. All time record closing here. 1,563. On rising rates on treasuries. The highest yield in a year. Low by historical standard. 3. 248 . And the year on 390year, up 10 this month alone. Lots moving on the mobile front, larry. Google will shut down its ereader and samsung unveiled galaxy 4. Blackberry moved on moves of the z10. Closed down just 4 . Jcpenney under the microscope. The credit default swaps, those widened dramatically. Fears of liquidity crunch hurting the stock, closed the day down more than 1. 5 . Larry. Many thanks, kayla. Strong king dollar, strong stock market rally. Stronger in vestment returns for the u. S. Economy. These are some of my themes. Things better than you think. I want to do a kudlow 101, quick one tonight. Lets get this thing back. This is yeartodate. Dollar up, about 3 . The dow is up about 11 and you can see just how they have been moving together very, very nicely. Now, i just want to make a couple of quick points. I know its only yeartodate. We are just talking 3 on the greenback and 11 on the dow. Dow is terrific. It reminds me a little bit of the 1980s and much of the 1990s, when the dollar went up, stocks went up and the economy was strong. I call it a growth trade. No one should fear a stronger dollar. Heck it will keep down oil and gasoline prices and inflation and help then consumer and help business. A stable, king dollar going with some progrowth policies may be coming out of washington. The point i want to make its business, profits and cash flow have given people confidence. And finally before i speak with my distinguished guest, i want to say this. I actually believe the dollar rally has something to do with the budget cuts from the socalled sequester in washington, d. C. We made a little progress on americas bankrupt fiscal finances. Lets turn to my pal, market pro done luskin, macro chief investment officers, and kayla also with us. Strong dollar, stronger economy, whats your take . Im waiting to hear the real story behind this growth thing that are you talking about. I know there was this thing in january called the american taxpayer relief act that gave no relief to any american taxpayer that raised taxes on any american taxpayer. 1 , 99 . Wages, dividends, capital gains. What about that reminds you much the 80s . Not good. But not near as bad. Here is one key point. Everyone talking about the higher payroll tax. I dont believe thats much of a factor. You know why . The lower payroll tax was a rebate, temporary, people didnt spend. They will not not spend now. Look at the retail sales number. The keynesian view of the payro payro payroll tax, not happening. People have been leaving the labor force for a dozen years. Take home pay went down 2 because of the end of the payroll tax holiday versus the year before and the year before that. People falling out of the labor force, and you think they are coming back when you are paying 2 less . Thats a supply side argument. I know the Participation Rate is too low. I think there is a lot of issues here, including all the people who are going to retire. They are not coming back into the labor force, and the peek of the female Participation Rate is over. I am participating. You have to carry the whole ball. My generation is not. Payroll tax is interesting, it hasnt been around forever. We talk about it as this entire wall of spending thats come crashing down. We existed before the payroll tax, we existed after that the dollar is an interesting indicator to watch. Its hard to trade the dollar if you dont have another currency on the other side. The dollar has moved in sight spite of itself in spite of whats going on in washington. Euro dropped to a threemonth low because of more austerity fears. Germany will balance budget earlier than expected. The there are moving in spite of itself. People are trying to get into the stock market. Thats why the dollar is going up. You know why . It is possible. It is possible that instead of 1 to 2 growth in the economy, we may be moving to 2. 5 , i have seen estimates of 3 growth in the economy. Those retail sales, those jobless claims, those isns, and those business profits, i was at the Business Roundtable with the coos, profits, cash flows, pristine balance sheets, the u. S. Is the place to be right now. Thats why the dollar is strong. A growth trade. Then why is the u. S. Underperforming so many of the worlds stock markets this year . Its behind japan, behind the uk. On a capitalization weighted basis, the u. S. Is underperforming the Morgan Stanley world index xus. Volatility is also underperforming. If you put money to work in those marks, you have to accept volatility is higher based on recent trends. Give it time. The japanese thing is terrific. A strong dollar, they are deliberately trying to weaken the yen. Japan is fighting deflation, and they are preappreciating the currency and will start pouring money into the economy. Thats exactly right. May help bolster the dollar, but i dont see why japan and the american stock marks cant go up. I cant vouch for britain or europe. European central bank is too tight and needs to ease more. I want to tell you this. This is a growth trade. Do not fear. I hear people say a strong dollar will wreck profits because it hurts. Thats baloney. Thats just baloney, nonsense. Probably 20 or 30 away from that remotely. We will come back and talk to you. Kayla, best of the best, and don, thank you. Coming up, an emergency manager for detroit. Can the city be saved by anyone . Is detroit going bankrupt . The interview with Governor Snyder and the man he chose to fix detroit, coming right up. And later, president obama tells Senate Republicans hes on their side when it comes to Corporate Tax reform and even entitlements. Whoa can we believe this . Hope springs eternal. Im an optimist. A report on what happened on capitol hill today, and dont forget, folks. Whether its detroit or federal policies, free market capitalism is the best path to prosperity if we do those, well soar on kudlow. Well be right back. Come on, nowadays lots of people go by themselves. No they dont. Hey son. Have fun tonight. Back against the wall aint nothin to me aint nothin to me [ crowd murmurs ] hey [ howls ] thats thats the beginning, just one of the clues youve had your first lesson in learning the blues call it motown blues. Facing a 327 million budget deficit and more than 14 billion in longterm debt, the city of detroit now under state control today. Michigans republican Governor Rick Snyder appointed an official emergency manager to take over the citys ailing finances, but will he be able to prevent the largest municipal bankruptcy in u. S. History. All right. Joining us now for a Business News exclusive. We welcome back Michigan RepublicanGovernor Rick Snyder and detroits new emergency manager, kevin orr, thank you, chairman, we appreciate it Governor Snyder, is detroit going into bankruptcy . Thats not the objective, larry. The objective, Better Services to citizens, Financial Stability and grow the city of detroit. One of the tools in the too many box could be bankruptcy. Thats not the place to go to start the constitution, and one of the things im excited about, is getting kevin orr on board. One of the best in the country on . This field. A top person to come do the work. Im excited to have him join the team. Its about all hands on deck, including the mayor, hopefully the city council, will Work Together to solve the problems. Mayor, mr. Orr, welcome. Your reputation as a great bankruptcy lawyer precedes you. I wanted to ask, how tough will you have to be . Talking salaries, talking pensions, talking Health Care Benefits, how much will you have to cut to get this job done out of bankruptcy . Well, hello, larry. And thank you for that compliment. The really is, larry, this is going to be a datadriven process. I had get boots on the ground. Governors team will do their analysis, and hopefully not just the mayor who stepped up, but members of the city council to take a look at everything. Everything is on the table. The good thing about this is, everyone agrees, a financial emergency. Everyone agrees something needs to be done about it. So the only thing really left to do is to do something about it. The question is, how do we do it . Id like to do it cleejialy, consensually and quickly. You know it wont happen. You are a great bankruptcy lawyer. Thats your reputation. Thank you. Im an admirer of dave bing, the detroit city council, impossible, they cant get anything done, thats why you are in the fix youre in. Look, you will have to break all the Union Contracts . Arent you . Lets start there. Not necessarily, larry. Your own city, new york, as well as philadelphia, came through a restructuring and didnt have to file for bankruptcy. Cities like pittsburgh and baltimore had financial crises. Mr. Orr. I was around. They broke the contracts. I dont know if you have to break them. You have to look at them and do an analysis of what needs to be adjusted. Governor snyder, i guess i ask you the same question. How far this has to go. I respect mr. Orr. A great reputation this is a brutal political financial story. All right, governor. Have you become a right to work state. I want to ask you, if these contracts have to be broken as i believe and im not alone in believing that, are you going to go after union privileges. Will you have to go after collective bargaining so that this fix can never happen again . Well, again, larry, i believe in collective bargaining. Freedom to work is a separate issue and its one of the things that many respects the city has done on a number of things with labor contracts already and i appreciate a number of labor people proactive trying to work through these things, this isnt a management labor question. This is about everyone in detroit coming together to solve problems and the starting point is not to look for conflict, but to look for Common Ground solutions in a positive way. The key here is, this has been 50 years in the making and been many failed attempts, well get it done, get it done right this time, trying to work with as many people on positive solutions as we can. Its about growing detroit. Great rhetoric, sir. And im an admirer of yours. If this could have been collegially, it would have been done. Thats why you had to bring in mr. Orr. You didnt want to do it you had to do it. Its a sensible thing to do. Governor, where is the money going to come from . Short 327 million. I dont know if thats the right number. 14 million in debt. Where is the money going to come if you dont break contracts and dont have across the board large cuts in salaries, pensions and health care . Where is the dough going to come from . Not about bailing out detroit. Thats not the solution. The solution, longterm stability, about asking people to come to the table and understanding their shared sacrifice and well work through with this with fundamentals. There needs to be Better Services to citizens and not just about cutting things. You can reduce costs and provide Better Service at the same time. They are not mutually exclusive. I appreciate that. And i view it, the city has been challenged and we have a top flight resource with an additional set of tools to come to bear and well get the job done in a constructive way. Not even the magic of kevin orr will solve this with just productivity increases. You know that, i know that, and were talking major slashes of dollars and cents. Let me go on to one last thing, mr. Orr. No stranger to the financial world. Bankers made a lot of money off detroit selling bonds, probably with terrible credit analysis. Okay . Who is it . Bank of america, merrill, under one roof. Jpmorgan, selling with if i get this right, 4 billion worth of bonds, collecting 474 million worth of fees, what the hell did the bankers tell the investors . How do you sell a city going downhill for 50 years as Governor Snyder just said . Well, you know, larry, the good thing about this question was i wasnt here. I was safely ensconced in my practice, and quite frankly, im not interested what happened behind me. Im looking forward, the reality is, bankers are remarkably sophisticated folks, they know the numbers, see the cash flow. Other numbers at place, regarding efficiencies, realization, profitability, and other City Services and as long as there is a net benefit to the city that might be able to get rationalized, cashiering, collecting more efficiently. A lot of opportunities short of breaking contracts and blaming the bankers. They to be perfectly honest about it, everything on the table, including debt service. You got it, sir. They hustled everybody with lousy credit, and people can see this coming, bankers ought to make paybacks. Kevin orr, are you very kind to come on. Thank you very much. Governor snyder, i thank you again. Great to be with you, larry. All right, take care. Smiling faces. Lets see if they do in a couple of weeks. Lets bring in the panel for the evening. Steve mcmahon, and don luskin and jim petralukis. Is it conceivable, remotely possible they wont break the contracts and slash all salaries, pensions, and Health Care Benefits . Listen they have a huge gap to close. 14 billion unfunded liabilities. Thats the easiest part of the. The easiest part going in, cutting salaries, breaking contracts. That will stabilize detroit. How will you grow it . How will the city flourish, not just muddling along . Not a place a lot of people would want to live . How do you grow detroit . How about cutting the staff, the union staff and the City Government by 50 and using some of those savings to pay off the debt and start cutting tax rates. Lets make detroit a taxfree zone. Jimmy talked about that earlier. Detroit should be the hong kong of the midwest. Hes absolutely right. How about that . Democrats have screwed everything up. Just blame the bankers. This is what happens when bankers run roughshod over folks putting up the money. Jims idea is a good one. The idea of a taxfree zone, creating a hong kong environment of growth, is a great idea. Asking people who make sacrifices what are counting on pensions, taking those things away from those folks is pretty unfair. They bankrupt the city. They didnt bankrupt the city. This is like wisconsin, indiana, like ohio. The workers the workers paradise of detroit. Unionized workers paradise bankrupted the city. Workers did nothing but trust Union Officials to negotiate deals. They sit around the same table, say the same thing, elected officials work for the unions. Blame banks, political leadership, even perhaps some Union Officials. One cheap shot. These bonds that the bankers sold, these bonds that these goofy bankers sold, the subprime version of municipal finance is it not . I give you the last word quickly . Of course it is. And how about the goofy investors who bought it . They relied on some goofy rating agency. This is a ship of fools, larry. I hope so. Blaming the workers and taking away their pension, what they worked their whole lives for is absolutely unfair. We wont get anywhere with tax subsidies that work i got to get out of here. I got to get out. Not the workers, just the unions. But the two are synonymous in detroit. Two of the biggest wall street names get flagged in the stress test. Kayla joins us with the full story. [ laughter ] [ female announcer ] each one of us is our own boss. And no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. Zap technology. Arrival. With hertz gold plus rewards, you skip the counters, the lines, and the paperwork. Zap. Its our fastest and easiest way to get you into your car. Its just another way youll be traveling at the speed of hertz. Has oats that can help lower cholesterol . And it tastes good . Sure does wow. [ buzz ] delicious, right . Yeah. Its the honey, it makes it taste so. Well, would you look at the time. 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