Bad as democrats, all right . How to turn poverty into prosperity if such a thing is possible. All of those stories and more coming up on the kudlow report beginning right now. Good evening, im larry kudlow on the kudlow report. Today is the best day of the year so far for the dow. Lets go over to the Bertha Coombs with all of the details of todays big rally. The one and only kudlow. You can see a lot of black and green. The dow and s p and nasdaq up 1 . Powered by strong earnings results. Earnings so far having been reported, earnings are up 9. 5 for the quarter, it being looks like. Revenues only up 1 and thats part of the problem. Meantime, though, blockbuster earnings today. Disney helped power the dow higher gaining 5 on the day on an earnings Beat Estimates it had strong growth at espn and frozen its animated picture, much better than expected performances at the box office and helped power the bottom line. Cocacola also rose after taking a 10 stake in Green Mountain coffee. The beverage is announced a tenyear deal to develop home beverages. The news initially sent soda stream shares lower but rallied on speculation that the maker could actually now be an acquisition target for cokes rival, pepsi. And it was donuts to more dollars for Dunkin Brands against all of the cold weather that has people eating more donuts and drinking hot coffee. Twitter losing a quarter of its value despite posting a surprise profit. But whats troubling for investors is that this was the fourth straight quarter that the social network saw slower user growth. The same story for linkedin after providing disappointing guidance. Well see if the bulls can follow through tomorrow, larry, after the januarys jobs report. Of course, last month, a very negative surprise. Bertha coombs, thanks. I can see that one of my tasks will be to tweet more. Anyway, lets get right to it on our great market panel. The world is not coming to an end. Thats how read one of the key themes. Joining me is jim urio, peter costa, president of empire executions, and michael, forbes executive editor. I go to you, mr. Urio. The world is not coming to an end. We saw that earlier in the morning with the jobless claims coming back down. How are you playing it now . Todays big gain has a lot of Technical Information on it. I would rather be long than short. I want to he are mind a month when we saw the print on the last jobs report. I heard the whole Trading Floor go, oh, man, because it was awful. We felt like we were coming to the end of the world back then. We need proof that its not. Its coming. When we get a bond price break like this going into one of these numbers and its a strong move, it seems like the number has confirmed that direction. I do think its going to be a decent amount tomorrow and id rather be long than short. I think were basically creating a tradeable bottom on the jobs question, if we get a lousy jobs report such as mr. Iuorio was describing, can it be blamed on the weather, john silvia, or will it be blamed on a sinking economy . Thats an important question. Weather or lousy economy if its a lousy number. I think its got to be more the weather than anything else. Yes, jobless claims continue to move down. Were looking for 195,000 jobs. Unemployment rate at 6. 6. Larry, theres too much in the economy that says weve got pretty good momentum Going Forward, probably 2 to 2. 5 , depending on how the fed counts it, Economic Growth year over year on a Fourth Quarter basis. I think weve got a lot of good things going for us. Its not a boom but its definitely good Economic Growth. John silvia, i doubt if anybody covered this data point but today we had productivity numbers. It was up 3. 2 in the Fourth Quarter and up almost 2 year on year, which is how you should look at that. Now, john, unit labor costs so price is rising, unit labor cost which is, what, about 65 falling . That is so good for profits, john silvia. We had tremendous profits momentum. Thats what im trying to teach jim iurio. Can you back me up on that . Basic economics, larry. Price of the output, a good proxy for your input costs. Profit margins look pretty good. You, on the other hand, ive got a problem with you. You dont like this market at all . Theres one thing that i could say to dissuade you. Larry, the economy is only going to grow as fast as the output and, yes, unemployment is falling but im not buying stocks until i feel confident that this emerging market problem in terms of falling economies and the trouble they are having there with their currencies is back on the write track. Were starting to see some of that with some of the emerging countries, supporting their currencies. But bei but, look, its becoming a much more important part of the court. I had former assistant treasury secretary on behalf of greece and he said its not argentina. Theyve probably already collapsed. They just wont admit it. Turkey is the one that has to be watched and, in particular, because europe is heavily invested in turkey and thats the one were watching. Now, if turkey can stay afloat somehow, the central bank did protect it by raising rates but the Prime Minister doesnt like it at all. Thats the one i worry about. And brazil. Its huge economically so if they and turkey and a couple others file suit that Atlantic Coast is so bad, argentina is becoming brazil. Go to chile, stay out of the atlanta south and peter costa, i want to get your investment take. Youre going into is this a time to buy . I think that we might be a little optimistic about tomorrows jobs numbers. Even though the weather has major effects, its not like one part of the country is suffering through cold or rainy or whatever. The whole country has been affected by this weather. I think youre going to see a lower number tomorrow. The market is going to react tremendously. Peter, im going to bet you, because ive known you for years. Im willing to bet you that spring will come. Yes. I am absolutely convinced in this great country of ours that spring and Better Weather will come. Why does stocks get hung up on storm systems in the winter . It still boggles my mind. To me as a trader its an opportunity to buy because i think the market sells off. Tomorrow its a great opportunity because i think short term one second. Ive got a couple for you. Cyclicals led the way today. Energy, tech. Cyclicals led the way. What does that tell you . Is that a progrowth signal or is that just because they are cheap . I think after seeing what happened on monday, i think there is still some people going out there and it was ready. The market was ready for some major move. We saw it a little bit on tuesday, much more today. I think its scary to see a market go up 188 points prior to some big number tomorrow. But i think its basically were bottoming off in oversold condition and i think this is a lot of traders getting back into the market. Jim iurio. Whether they used the Inflation Expectations, they have really dropped about 30 basis points. Theyve actually dropped about as much as the tenyear bond, which has dropped about 30 basis points. What does that mean . Why are inflationary expectations coming down, in jury judgmen your judgment . Well, if you lived in chicago for a few months you would not be sure that spring was coming. Secondly, i think that this whole month, the first five weeks of this year has been based on a lack of optimism of the whole economy. So that Inflation Expectations and mild expectations of deflation seem to be kind of normal considering thats the mood we are in by the way, i think theres a solid chance that it is because too many people are expecting its going to be the weather. And i think its time for a beat. John silvia, what im gathering, i think theres going to be a big drop in the gold price. Also, i think gold is way too high. But they all say that they are going to be imparting any deflationary conditions that might be occurring . Is that why these bond rates have come down and is that why the inflation rates have come down . No, i think it reflects the global downshift in terms of the economic expectations. For me, larry, the trend of the year, a lot of people are talking about 3 , 3. 5 gdp. They have really downplayed that global phenomena in terms of strength and thats the driving factor. But i am fairly comfortable with the low inflation forecast Going Forward. I mean, john, it looks to me i think you said a number before but i dont see how you break out of the 2. 5 growth rate. Labor force hasnt grown in years, by the way. But is that about where you are and can the stock market produce, lets say, 10 earnings that would lift up the market or is just 2. 5 not going to do it in. No, 2. 5 on a Fourth Quarter basis, which is what the fed publishes, thats our outlet. 2. 5 gdp is a good number. You continue to be more efficient all the time. Getting back to your point about unit labor costs, being incredibly efficient about unit costs and a lot of technology against the process. Im just telling you, for all of you people out there and for the people sitting around here, youve got to watch that number, unit labor costs if prices are rising faster than costs, youre making money. If prices are falling, youre not making money. Right now they are rising. Not hugely but just enough to get us profits. Thats why i think this market is very viable. Ive got to get out of here. Peter, jim, john silvia, thank you, gentlemen. Another bombshell problem with obamacare. If you make just a dollar too much at your job, you may end up losing thousands of dollars in subsidies. Just another salvo in the war on work. And dick myers is going to join us to talk about how much its going to cost in december. Im coming right back but ill say it for the 100th million time, there is no free market in that whole obamacare program. We should scrap it. Im kudlow. Well be right back. We have to pass the bill so that you can find out what is in it away from the fog of the controversy. All right. That was then speaker of the house nancy pelosi talking about obamacare before it became law. I think she was exactly right. I think its all leaking out now and nobody particularly likes what these leaks are telling them. Now, weve got the critical 2014 midterm elections approaching. Im guessing democrats wish they had actually read that bill before voting for it. Maybe im wrong. Here to offer their expert analysis, former clinton adviser and radio talk show host dick morris is back with you and senior fellow at the manhattan institute. Before we get into the politics here, weve got ourselves whats being called a job trap and a poverty trap where, you know, this thing incentivizes less work. Do i have that right . Can you briefly explain to us this whole brewhaha over 2 1 2 million jobs lost . The three reasons that obamacare is shrinking the labor force, it contains tax increases over the next ten years and i dont need to remind your viewers why that would shrink the labor force. The second thing is that there is this employer mandate that requires every business with more than 50 workers to offer health care to the workers. It means that employers have to hire more people. Thats point number two. Point number three is that lowincome people will be eligible to buy the insurance plans and as a result of the subsidies, because they have an economic value, people can work less amount of hours. That gives an incentive to work less. People are calling it a steep subsidy cliff. Thats what im seeing around. It pays to work less because then you might have a lower cost but bigger subsidy. If you work more, not only do you lose your subsidy but you might go into a higher tax bracket. So its like a double loss. Now, this is the dumbest thing. This is not just obamacare. A lot of these antipoverty claims have the same problem. Why dont they try to fix this . One thing i want to caution you on is any plausible plan that reforms the Health Care System in such a way that we stop over subsidizing the wealthy and attract some help to a safety net, its going to help to a degree. The problem with obamacare, the effect is very, very large because of all of the other destructive things that obamacare does. So, for example, this Senate Republican bill that we all like to replace obamacare, that bill will have some of the same effects but to a much more modest degree. Dick morris, on top of the rise in premiums and deductability and cant get your doctor, cant get your hospital because they are out of network, now weve got the cbo numbers, as you well know, showing a massive equivalent of 2 1 2 million job losses. Republicans are saying i told you so. What is the political impact of this in the 2014 midterms . I think its devastating. I think that every day we learn something new about this law that we dont like. The steep cliff that was being talked about earlier on my radio show today, if you make 62,000 and live in wisconsin and youre 55 years old and your income goes up by 1 dollar, you lose 13,000 of government subsidy. The problem is, this is exposing the fundamental weakness in all of the entitlement programs and giving everyone a crash course of what europe is all about. I really agree with that. Thats an important point. Were going to cover that later in the show. Youre right. All of the usa poverty programs suffer from defects that are very much like that. By the way, larry, when i worked for clinton, he worked very hard and very success full. He lowered the cliffs. So the marginal 1,000 bucks that anybody would make, they would keep a large portion of it. But its like these folks are at an 80 tax bracket when they go to work. But lets look at this politically now. Republicans need 5 to be at 50 50 in the senate they need a 6 to take the senate. Do you think, in combination with all of the other criticisms of obamacare, the higher premiums, the doctors, the hospital, the fact that the president did not tell the truth regarding you can keep your own plan, now we have this job loss problem. Will this push the gop over . Will this go out there and hammer obamacare, hammer job losses and hammer the economy . Is that their strategy . Yeah. Absolutely. And the Playing Field is very pro republican. You have three seats that are giveaways to republicans that are certain to take them to the Democratic Senators and republican states, montana, south dakota, and west virginia. Then you have four democratic incumbents who are highly endangered species. The only one clear chosen is arkansas and cotton is ahead in the polls. The other three landrieu and begich, it looks to me like two of three of those are going to lose. And then you have four of the states waiting in the wings that are blue states. Ive been following these people. Terry could win this thing. And then in minnesota you have a woman named omart and shes got a shot and youve got a woman in oregon named webby running against merkley. In New Hampshire you have robert smith, bob smith the old senator, or scott brown the massachusetts senator. Smith cant win. Brown could win. Smith cant win. There is so much complaining going on about the shrinking networks of doctors and hospitals and a lot of heat you probably saw this in the newspapers, is any of that stuff going to get changed . The great example with senator tom coburn whose own oncologist was not included. Is that going to change . Its not going to change and here is why. In a quasi marketbased system where you have a choice among different plans, the premiums are going to be lower for those who have a lower network of doctors. The problem with obamacare is not that the narrow of the networks for doctors are narrower. Its that youre paying a higher premium and having a narrower choice and a higher deductible. One thing about the politics, heres the thing, the democrats are going around saying its a good thing that the labor force is shrinking. Thats an incredible that is incredible. You are so right. Im glad you raised it. That is the dumbest thing i have ever heard in all my political years, which goes back several decades. I cannot believe it. It will give them time to pursue their dreams. Yeah, right. Taxpayers are going to be paying so other people can pursue their dreams by quitting the workforce . Thats crazy. Thank you very much. Ive got to get out of here. Now weve got a verdict today in the major Insider Trading trial of former matthew. We go live to the courthouse for that report. When you order the works you want everything. An expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. But with less energy, moodiness, and a low sex drive, i had to do something. 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Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about axiron. The former at the center of the Insider Trading case that brought down steve cohens trading business was today. What can you tell us . Matthew martoma, former Health Care Portfolio manager at sc sac capital was c