Cantor: There Is No $33B Deal

House Majority Leader Eric Cantor just told me in a CNBC interview that there is no deal on budget cuts for the continuing resolution. “Well, I can say with definite answer, there is no deal,” he said. “So, yes, there’s a lot of talk about some number being out there. That number is not the $61 billion we’re looking for.”

A bunch of news stories today reported on a $33 billion deal to cut spending from the current-year budget. Vice President Joe Biden has been bandying this about, and at least some Senate Democrats have used it.

But Mr. Cantor steadfastly denies the deal. Earlier today, Speaker Boehner also said there was no deal.

The Tea Party Patriots group is massing out of the Capitol in a demonstration aimed at keeping the House Republicans’ spending-cut backbone completely upright. This is good. Because actually, that $33 billion spending-cut number includes the $10 billion cut from the two prior CRs. So the new number is only $23 billion.

And in round numbers, the GOP needs $60 billion or so to get back to the 2008 baseline, which was their original pledge.

Mr. Cantor emphasized bringing the spending levels back to 2008. So he added, “Nobody is rallying around that $33 billion number. That number is not a number that I subscribe to.”

The full interview with Eric Cantor will be shown tonight at 7 p.m. EST on CNBC.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET ...

MARKETS
- Brett Arends, Columnist The Wall Street Journal
- Jordan Kimmel, T3Live.com Market Strategist
- Lee Munson, Portfolio Chief Investment Officer

INFLATION ALERT REPORT- CNBC’s Brian Shactman reports.

JOBS REPORT PREVIEW
- Carl Riccadonna, Deutsche Bank
- Peter Morici, University of Maryland Business Professor; U.S. International Trade Commission Fmr. Chief Economist

LIBYA LATEST
- NBC’s Richard Engel reports.

KUDLOW EXCLUSIVE
INFLATION; FED BASHING, MONETARY REFORM
- Jim Grant, founder of Grant's Interest Rate Observer

BUDGET; GOVT SHUTDOWN; KILLING OBAMACARE; GROWTH PLAN
Rep. Eric Cantor (R-VA)

GE PAYING NO TAXES; TAX REFORM
- Robert Reich, Fmr. Labor Secretary; "Aftershock: The Next Economy and America's Future" author; CNBC Contributor; Univ. of CA., Berkeley, Prof - Berkeley
- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author

Market Pauses Ahead of Tomorrow's Jobs Report

The market is roughly flat in early trading, after another nice day of gains yesterday. There is not a lot in the way of market moving news this morning. And tomorrow we will get the big monthly jobs report, which is expected to show employment gains of roughly 200k. In economic news, the Chicago PMI came in at 70.6, which is stronger than expected. In corporate news, Mosaic (MOS) posted an upside surprise, and the ag group is all rallying. Agrium (AGU) is currently trading back above its 50-day average. Berkshire Hathaway (BRK.B) suffered a bit of a setback today with the resignation of David Sokol, who many had thought might be a successor to Warren Buffet. Commodities are rallying again, with oil prices back to $105.70, and gold prices up near $1438. Asian markets were higher overnight; the 10-year yield is flattish near 3.45%; and the VIX is up a tad to 17.76. Trading comment: If the S&P 500 finishes near these levels, it will be up about 5% for the first quarter of this year. That would market the best Q1 performance since 1998. Not bad. More stocks were added to the list of breakouts yesterday, as the market seems to be regaining its footing. I would continue to buy the dips, as I think the market will work its way back to new highs before the summer. We will have to see if the 'sell in May, and go away' axiom is in play this year. long AGU

COMMENT CLEANER & 6 MONTH OFFER

I'm going to be away from the blog for the weekend at a national weightlifting meet. For the weekend only I will run a $100 6 month special. That's $20 off the normal 6 month rate.

Here is the link to the premium site. Scroll down to the lower right hand side of the home page and click on the Subscribe link. Enter  in the promotional code box and click continue. You will be linked to a page with the discounted subscription offer.

See ya when I get back...hopefully uninjured and with another national title under my belt. 

Promotion has ended.

Full-Throttle Drill, Drill, Drill

If you buy into the energy speech President Obama delivered on Wednesday, it sure sounds like we’re headed for drill, drill, drill. It would be a total reversal of policy. I guess $100-plus oil and near $4 gas at the pump — along with a consumer economic-political revolt — will do that to you.

After bashing oil and gas companies for a couple of years and instituting a virtual drilling moratorium, President Obama now says yes to offshore oil and makes a big pitch for natural gas. There may even be incentives for faster leasing and smaller royalty payments to the government.

Is it credible? Well, when you get to the fine print, it may not be.

In the fact sheet that accompanied the speech, there’s a lot of talk about “responsible development” for natural gas fracking chemicals, state regulators, tapping experts, the environmental community, and protecting public health and the environment. In other words, the standards for new drilling could be so high that there won’t be that much new drilling.

The president doesn’t discuss the role of the EPA, which is going after coal, natural gas, and oil. And while he says he’ll speed up new leases and permits, he then blames oil companies for not using their old leases. That’s an old saw of an argument that neglects to mention dry holes.

I believe natural gas is the answer to our energy problems over the long run. It’s real cheap. And we have boodles and boodles of it. While the president says we’re going to reduce oil imports by one-third in 2025 — something that sounds suspiciously like a backdoor cap that will damage job creation and growth — the U.S. is expected to be a natural-gas exporter in the next few years. That’s how much of it we have.

So it seems to me that the trick is to figure out efficient ways to pump that natural gas into cars. Or to liquefy it and then get it into cars. Or to use the steam from the gas and get it into cars. Some mass-transit systems on the West Coast are already doing this.

And here’s another rub: Heavy federal subsidies for solar and wind, which come to roughly $24 per megawatt hour, still won’t be able to compete with cheap natural gas. Solar and wind are already less than 1 percent of total electricity. If the market can produce it, fine. But there’s no evidence of that.

And then there’s the ethanol disaster.

We’ve already learned that ethanol has a heavy carbon footprint — even Al Gore acknowledges this. But we’ve also painfully learned that farmers are planting corn for ethanol instead of for food consumption. They are foregoing wheat for the corn, and all this is helping drive food prices through the roof worldwide.

You can add Ben Bernanke’s dollar-depreciation to that food inflation. And if we had King Dollar, once again convertible to gold as Lew Lehrman has proposed, then oil prices might be closer to $25 a barrel instead of $100. During the Bretton Woods period, when the dollar was linked to gold, oil was about $2.50. And today, market forces are actually reducing oil use as a share of GDP. With higher oil prices and the onset of natural gas and other alternatives, oil per unit of economic output is down about 50 percent. That’s good.

All this is why I favor market forces and a drill, drill, drill policy. The U.S. has 112 billion barrels of oil, both on- and offshore. As much as two trillion barrels are locked up in shale rock. Even excluding shale, discovered oil resources could fuel 60 million cars for about 60 years. These are all Interior Department statistics.

And by the way, market forces create significant incentives for oil, gas, coal, and nuclear producers to be as safe and environmentally sound as human engineering can make possible. They don’t want BP-level calamities. Nor do they want repeats of the Japanese disaster.

But here’s what America wants: Less government and fewer regulatory barriers in order to unleash the great American energy industry. If we do this, not only will we get the power to fuel the economy, but millions of new high-paying jobs will be created.

Does President Obama get this?

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET: MARKETS - James Altucher, Formula Capital Managing Director - Jack Bouroudjian, CEO of Index Futures Group - Brett Arends, Wall Street Journal Columnist THE ECONOMY … WHY THE DISCONNECT BETWEEN CONSUMER CONFIDENCE & CEO CONFIDENCE … IS ANOTHER RECESSION BREWING? - Robert Reich – former Clinton Labor Secretary - Steve Moore, Wall Street Journal editorial board THE LATEST FROM LIBYA - NBC’s Richard Engel reports. OIL: TO DRILL OR NOT TO DRILL … THAT IS THE QUESTION - Steve Forbes, Forbes Media Chairman & Editor-in-Chief - Rep. Jay Inslee (D) Washington - Sen. Kay Bailey Hutchisen, (R) TEXAS - Michael Brune, Sierra Club Executive Director REALTOR FOR THE DICTATORS - Scott Cohen reports from London SPRING CLEANING YOUR PORTFOLIO - Michael Farr, Farr, Miller & Washington/CNBC Contributor Please join us at 7pm ET on CNBC.

We Must Keep the Legacy of Reaganomics Alive

Last week I had the honor and privilege of participating in the Reagan Centennial celebration here in New York City. It was truly a wonderful event put together by the Reagan Presidential Foundation, the Manhattan Institute, and the Wall Street Journal. Almost all of the key surviving architects of Reaganomics were gathered together.

The purpose of the event, “Supply-Side Economics: From the Reagan Era to Today,” was to review four key principles of economic growth initiated by President Reagan: Low tax rates on a broad economic base, sound monetary policy, free trade, and sensible regulatory policy.

These principles are what unleashed a wave of economic growth that led to an era of unprecedented prosperity here in America. And these same principles can restore our country to prosperity today.

Joining me in a special panel discussion moderated by CNBC’s Maria Bartiromo were two terribly bright thinkers: Lew Lehrman and Lawrence Lindsey. You can watch the entire conference at the Manhattan Institute. Here are a couple excerpts from my panel remarks.

Growth solves a lot of problems, okay? Growth solves budget problems, growth solves deficit problems, growth solves debt problems. I’m all for limiting spending. I just want to say that. Yes, yes indeed. We get back to 20 percent of GDP or less on spending, I am fine with that, okay? Fine with that. But I don’t see debt as this new red menace out there. What I see is growth as the Lord’s savior to the economy and our fiscal position. . . . Just make the dollar sound and keep marginal tax rates low. The economy will grow beautifully. But if the dollar falls, as it’s been falling for ten years — on the index it’s at a ten-year low, nearly — then it neutralizes the lower tax rates, you see what I’m saying? Because commodity prices soar and the capital flows outside the country, and it’s a dreadful policy. So, low tax rates, limited government. Keep the dollar sound.

Right now, Republican presidential candidates are beginning to prepare for the upcoming election and are formulating their respective policy agendas. The key question the GOP candidates should be asked is whether they have a real pro-growth agenda. This, along with a free-market focus and a strong dollar policy, is absolutely key.

We must keep the legacy of Reaganomics alive.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET: MARKETS … CONSUMER CONFIDENCE DOWN, HOME PRICES DOWN AND AGAIN THE MARKET SHRUGS - Stephanie Link, The Street Director of Research - Larry Glazer, Mayflower Advisors Co-founder - Don Luskin, CNBC Contributor; Trend Macro CIO JAPAN DISASTER GROWING ; IMPACT ON AUTO PARTS - CNBC’s Kaori Enjoji reports from Tokyo. JUST HOW BAD IS THE HOUSING SLUMP? CNBC’s Diana Olick reports. - Brian Wesbury, First Trust Advisors Chief Economist - Keith McCullough, Founder & CEO of Hedgeye Risk Management; CNBC Contributor LIBYA LATEST - NBC’s Richard Engel reports. GEOPOLITICS OF LIBYA, SYRIA TURMOIL & IMPACT ON OIL PRICES WHAT'S THE GROWTH POLICY TO SAVE U.S. FROM OIL SHOCK? - John Kilduff, Again Capital partner - David Goldman, Former head of fixed income research at Bank of America - Helima Croft, Barclay's Geopolitical Analyst - Mort Zuckerman, N.Y. Daily News Publisher; U.S. News & World Report Chairman & Editor-in-Chief FREE MARKET MATTERS: WHERE'S THE GROWTH PLAN? - Keith Boykin, Former Clinton White House Aide; Editor of The Daily Voice online news site; CNBC contributor - Mark Simone, WABC Radio Talk Show Host - John Fund, Wall Street Journal Columnist Please join us at 7pm ET on CNBC.

Quick Look: Stocks Steady On Light Volume

Stocks are higher again in early trading, but we saw this happen yesterday morning only to fade later in the day. Volume on the NYSE yesterday was the lightest of the year. The Consumer Confidence index for March came in at 63.4, below expectations for 65.0. Asian markets were lower overnight, and Europe is lower this morning after S&P downgraded both Greece and Portugal's debt ratings. Oil prices are higher to $104.40, while gold is flat around $1419. The 10-year yield is higher to 3.45%; and the VIX is down 3.5% to 18.75. Techs stocks are leading so far today, while financials are lagging. Yesterday we some some more breakouts to new highs, include MercadoLibre (MELI) and Lululemon (LULU). Trading comment: Yesterday's light volume hints at a lack of real conviction behind the buying, the list of leading growth stocks breaking out is slowly growing. I would still focus on the relative strength leaders, as they continue to outpace the overall market and should continue to do so. Lots of energy stocks are also showing favorable price action, as they take advantage of high commodity prices to grow earnings. I don't think now is the time to bottom fish or try to play catch-up with the laggards. long LULU, MELI

Pawlenty for President?

Here's the video of my interview last night with presumptive GOP presidential candidate, former Minnesota Governor Tim Pawlenty. Here's the key question: Does Governor Pawlenty have a real, pro-growth agenda?

The Gasoline-Driven Inflation Hike

Last week, the Commerce Department revised real GDP up to 3.1 percent for the fourth quarter of last year. That was some cause for joy in the stock market. But today we saw a poor consumer-spending report for the month of February, which is picking up the rise in gasoline prices and the decline in consumer sentiment.

Real income after-tax — known as real disposable income — actually fell in February. But the inflation rate jumped 0.4 percent, which is almost 5 percent annually. And while real consumer spending did rise, over the past three months it has gained by only 1.4 percent annually.

The gasoline-driven inflation hike now puts consumer inflation as measured by the personal consumption deflator at 4 percent over the last three months. That’s higher than wage and salary income. So while energy prices are bulging along with food, real wages look to be falling — not a good combination.

So I repeat my Q1 caveat emptor.

Now, all may not be lost, because manufacturing production looks strong and job creation looks somewhat better. Housing, on the other hand, is still slumping. Some smart economists I know now think Q1 GDP could be less than 2 percent. But they expect a rebound in the spring and the rest of the year.

Well, maybe so. But a lot depends on gas and food prices and other inflation factors, and that in turn depends on the dollar. If the greenback keeps sinking and producer prices for businesses keep rising, then corporate profits may really disappoint along with the slide in real consumer spending.

How about flat-tax reform and a King Dollar linked to gold?

2B REVERSAL

We need a comment cleaner so I thought I would post the 2b reversal on the XLE for you short term traders. Hint: very tight stop with high risk reward ratio.

Explanation of the 2b reversal is in the terminology document for subscribers.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET: MARKETS - Ron Kruszewski, Stifel, Nicolaus Chairman & CEO - Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager - Jim Iuorio, Options Action Contributor; Director, TJM Institutional Services HOW TO GROW THE ECONOMY? DID OBAMA HANDLE LIBYA THE RIGHT WAY? - One-on-one with presumptive presidential candidate Gov. Tim Pawlenty (R-MN). THE FIGHT FOR LIBYA - NBC's Richard Engel reports. PREVIEW: PRESIDENT OBAMA'S ADDRESS ON LIBYA - John Harwood, CNBC Chief Washington Correspondent - Col. Jack Jacobs, U.S. Army (RET.) OBAMA'S PRESIDENTIAL ADDRESS ON LIBYA ANALYSIS OF PRESIDENTIAL ADDRESS ON LIBYA - John Harwood, CNBC Chief Washington Correspondent - Col. Jack Jacobs, U.S. Army (RET.) - Helima Croft, Barclays Capital Senior Geopolitical Strategist - Dan Senor, Sr. Fellow for Middle East Studies; Council on Foreign Relations Please join us at 7pm ET on CNBC.

Monday Morning Musings: Where's The Volume?

The market is slightly higher in early trading, amid relatively light newsflow. In economic news, pending home sales rose +2.1% vs. expectations of 0.3%, but the housing news lately has been pretty weak overall. Markets in Asia overnight were mostly lower, with Japan still dealing with radiation levels. European markets are mixed this morning. The dollar is down a little, but most commodities are lower also. Gold prices have pulled back to $1418, and oil prices are down also near $104.50. The 10-year yield is higher to 3.45%; and the VIX is up 2% to 18.33. Trading comment: All of the major indexes have recaptured their overhead 50-day moving averages. That is a good techincal sign, but the volume last week was lackluster at best. After selling off on higher volume over the last few weeks, the bulls are looking for confirmation that this market has found its footing by showing conviction (high volume) buying. A few leading growth stocks have broken out to new highs, but volume there too has been somewhat suspect. I don't want to throw too much cold water on the potential for a new leg higher, I'm just pointing out that volume was lacking last week. But the price action is promising, and maybe volume will begin to pick up. This week brings quarter-end on Thursday, so we could see some window dressing activity on the part of portfolio managers.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET:

“TEFLON” MARKET?

- Martin Weiss, Weiss Research CEO
- Michael Cuggino, Permanent Portfolio Funds; President
- Lee Munson, Portfolio Asset Management CIO


FED UNDER FIRE: BERNANKE TRANSPARENCY … POSITIVE OR NEGATIVE FOR MARKETS? WHAT SHOULD BE FIRST QUESTION TO BERNANKE? WHAT SHOULD FED BE DOING RIGHT NOW?

- Michael Pento, Euro Pacific Capital Senior Economist
- Joe LaVorgna, Deutsche Bank Chief U.S. Economist

“TEFLON” MARKET? PART II

- David Kotok, Cumberland Advisors Chairman & Chief Investment Officer; CNBC Contributor
- Michael Farr, Farr, Miller & Washington President President
- David Tice, The Prudent Bear Fund Portfolio Mgr.

FREE MARKET FRIDAY
CORPORATE TAX HOLIDAY; REPATRIATION; TAX FREE GENERAL ELECTRIC
- Steve Moore, Sr Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author; Founder & Fmr. President of the Club for Growth
- Keith Boykin, Former Clinton White House Aide; Editor of The Daily Voice online news site; CNBC contributor
- Mark Simone, WABC Radio Talk Show Host

Please join us at 7pm ET on CNBC.

Stock Action Becoming More Constructive

The market is higher again in early trading. The latest estimate for Q4 GDP came in above estimates at 3.1%, a solid showing.

Asian markets were higher across the board overnight, despite concerns about radiation leaks in Japan. And Europe was higher this morning even though S&P downgraded Portugal's debt rating to BBB.

The dollar is in positive territory, which could be limiting oil and gold. Oil prices are flat near $105.60, while gold prices are down a tad to $1436.

In corporate news, Oracle (ORCL) reported solid results and guidance, and its stock gapped higher. Ditto for Accenture (ACN). But RIMM is getting hit for 10% after giving mixed guidance.

The 10-year yield is flat at 3.40%; and the VIX is down another 4% to 17.22.

Trading comment: The S&P 500 and Nasdaq are now both back above their respective 50-day averages. This makes it likely the correction has run its course. Yesterday's rally was solid, even though it didn't come on heavy enough volume to qualify as a true follow through day. But plenty of stocks were on fire, with some names like LVS and MELI up more than 7% on higher volume but no news.

There are plenty of stocks breaking out, and you know that's where I look for leadership. Here is a partial list for readers to check out:

• SXCI, PNRA, CLR, DE, SRCL, CTSH, CEVA, IPGP, VRX, PCLN, OPEN, BIDU, CYMI, HMSY, ULTA, SFD

Have a good weekend.

long SXCI, DE, SRCL, CTSH, CEVA, VRX, PCLN

A Pro-Growth Recipe for America

Here are a few of my latest thoughts on how we can light a fire under U.S. economic growth.

There's No Such Thing As Supernatural: Everything Is Miracle!

Dark Night of the Soul

Things have felt a bit difficult since being back in Moab - not so much outwardly, but in my body, mind, and spirit.  I just got over a bad case of bronchitis that's been going around Moab.  And inwardly, it's incredible the times of intense doubt I was catching myself going through the past few weeks, nothing like I've felt since giving up money.  But I sit with those times, and they pass, and I then find that something grand has been growing in me in those times like a baby in the womb.  I have a pregnant cousin who is describing a similar intensity within her.

Snail-Mail Synchronicity

Outwardly, perfect synchronicities keep happening.  I forgot to mention one that happened in Phoenix months ago.  I'd left Slab City and forgot to return a poetry book (written by a former Moabite) to my friend, Jon, there.  He emailed me and I told him I'd mail it back to him.  Then I remembered snail-mailing takes money.  One time I had to mail a package some 9  years ago, and I found a pile of coins in the street, just enough to mail it that day.  But this time I didn't want to use money.  I'd rather this time send it with somebody or something already going to Slab City.  But what are the chances of that?  A silent voice deep inside me kept saying, "just you watch, it'll work out," so I ceased worrying about it.  I was staying at Claire's house, never having mentioned this to her, and one day she asked me, "I am going to the post office to mail a package to some friends in Slab City.  Would you like me to mail anything anywhere for you? My mouth dropped open. We simply included the little book in her package and she sent it off.  Then she asked me, "So if you don't use money, how on earth did you intend to get that back to Slab City?"  I said, "I didn't have a clue.  But it's happening right now, and you're part of the mysterious process, huh?"

Sleeping-Bag Synchronicity

Now, back in Moab, I've stayed mostly up at the cave, but decided to also set up a camp near town for when I can't make it up the canyon at night.  I still had the sleeping bag Gregory and Beth had lent me last autumn for the California trip.  But I still wanted to use it at the town camp, since it was still too cold at night for a blanket, and return it when it got warmer.  I wanted to see Gregory and Beth, but, I must confess, I was avoiding it because I didn't want to deal with the sleeping bag.

 

Meanwhile, Carolyn and I have been brainstorming about things we could do to cultivate sustainability in Moab, to break people's dependence on money.  We had both seen the film, "The Power of Community: How Cuba Survived Peak Oil" at about the same time last winter, her back east and me in LA, which got us both inspired to want to do something back in Moab.  I kept talking about how we should start mobilizing people to convert their yards to vegetable gardens, among other things.  Last week, she said, "Why don't we get something going right now, schedule a gathering and show the film?"  I agreed, so we scheduled the "Sustainable Moab Project and Potluck".  We were wondering where we would get seeds, and if people would step up to provide yards to garden, so we'd have something to start with.

That night I crawled back into Gregory and Beth's sleeping bag, thinking how I needed to return it to them.  That silent voice spoke to me again: "Where is your faith?  Just return it to them tomorrow and you just watch something work out!"  I knew they would actually give the bag to me if I asked, but I wanted to return it to them, especially after that silent voice.  So the next day I packed up the bag, ready to take back to them, but first decided to ride over to my friend Pete's house, near the storage unit, before I brought them the bag.  There on the ground was a really nice sleeping bag laid out (I've lost count, but I think this is the fourth or fifth time I've had a sleeping-bag miracle happen like this exactly at the right time over the last 15 years).  Then I took Gregory and Beth's bag back to them. 

Sustainable Moab Project Synchronicity

Little did I know as I returned the sleeping bag, Gregory and Beth had heard about our Sustainable Moab Project and said they really wanted to participate, though they didn't have time to work but had a yard we could maybe use, plus they had two boxes of all kinds of seeds they wanted to give us, along with a good gardening book!  I had no idea they would be interested or had those things!

So we had our Sustainable Moab Project Potluck, showed the movie, and had a pretty good brainstorm discussion afterward.  Even with our last-minute notice, over 15 people showed up.  I feel so grateful Carolyn is here.  She's lighting a fire under me and we're doing things I don't think I have the gumption to initiate on my own.  But it sometimes hits Carolyn and me that we wonder what we're getting ourselves into.  Sometime this seems a daunting commitment, and naturally we have felt scared.  But she just read something very wise about fear (maybe I can put the reference here later) and shared it with me.  We think of fear as a bad thing, it said, but, if we use it right, fear is actually the source of exciting energy that takes us out of our listlessness, giving us the power to perform and build our project. I'm realizing that's so true.  People who do risky sports like rock-climbing or tight-rope walking know this. Everything in the universe is good, in its proper place and timing, including fear.

In Tent Synchronicity

Meanwhile, back at the camp, I slept cozy in the new bag.  A couple nights it was really windy, and my tarps and plastic coverings were whipping around like crazy, tearing the plastic.  Rainclouds were blowing in with a few showers.  I've always preferred tarps or plastic to a tent, because they're simpler, but this time I thought, "I think I now need a tent - this is getting a bit out of hand."  Then next day I rode back to that storage unit and decided to peak in the dumpster and saw what I thought was a rolled up tarp.  I took it, thinking it would be good reinforcement.  I unrolled it back at the camp and discovered it was a pup tent, in perfect condition, with stakes!  So now I'm all bourgeoisie at my townhouse with a sleek sleeping bag and tent.

Nothing or Nobody is Special:
All the Universe is in Synchronicity

Yeah, this is stuff that keeps happening to me outwardly.  And it's not because I'm special.  Rain falls on everybody, good and bad, alike. Miracles happen to everybody, but most people don't notice them because too much stuff and thought accumulation closes their eyes to it. How else would life have evolved so miraculously and synchronistically million years after million years?  For me, it astonishes me that I forget these continual synchronicities so easily, and it scares me a bit that I can relate to the Pharaoh in the Torah legend, hardening his heart even after getting miracle after miracle thrown in front of  him.  Rationality is a good and natural thing, but when it gets out of balance, it becomes a bully and rationalizes away intuition, blinds us to miracles continually before our eyes. 

No Such Thing as Supernatural:

Everything is Miracle

But we must be clear what miracle really is.  When we become superstitious, we think miracles are super-natural, because our minds are strayed from the present, unable to see that every moment is total miracle.  What we think is "supernatural" is nothing more than natural that is somewhere else, that we can't explain.  If we saw "supernatural" occurrences here and now, we would get bored with them as natural.  Nature is miracle, and the mind removed from nature, discontent with nature, is searching for super-natural.  It's our
"adulterous" mind, our mind that cheats on the Present, that seeks after signs, seeks miracles other than what's before our face.  It's the marketing mind, which thinks imported products are better because they are from "exotic" places.  But to the pure, all things are pure.  To the miraculous, all things are miraculous. 

The very first chapter of the Bible says that everything in the universe is Good (Genesis 1:31).  According to the Gospels, Jesus says there is none Good but One God (Luke 18:19)  If you believe Genesis and Jesus don't contradict, you can draw only one conclusion. 

Death and Resurrection Ever Now
To the true Christian, a seed sprouting from the ground and a baby being born is exactly as miraculous as Jesus rising from the dead or Adam being formed from the dust of the ground, because they are all One Thing, all happening ever Now, and the same yesterday, today, and forever.  The Quran constantly states that the Death and Resurrection is ever happening before our eyes, and that the Day of Resurrection is the Eternal Today, and we all resurrect as One Soul (Quran 31:28).  The superstitious mind might think I am devaluing Jesus by saying his resurrection is no more significant than a fungus spore sprouting.  On the contrary, our superstitious mind is devaluing the Omnipresence of Christ by not recognizing that Jesus and the fungus spore resurrecting are one thing, Christ come in the flesh, right before our eyes, that Christ is all and in all (Colossians 3:11), Ever Here.  The Bhagavad Gita emphasizes this, that the enlightened mind sees the Holy in everything and everybody and regards dirt, stone, and gold as all equal (Gita 14:24).  The marketing mind sees one object more valuable than another, one person better than another, one thing, place, or person as sacred and another as profane, one event more favorable than another, one religion superior to others, unlike the Holy mind, which is no respecter of persons, as the Bible keeps saying .  The Tao of Heaven is impartial, Tao Te Ching 79 says. The Infant Mind is the Zen mind, and sees all things in perfect equanimity, the Buddhist sutras keep telling us. 

Persecuting the Holy

Is Persecuting Nature
Is Persecuting Our Own Natures

People crucify the Holy before their very eyes because they only see insignificance, common-ness.  They do not see that the way, the truth, and the life is Omnipresent, everywhere and right here, I am who I am. They think the Holy always comes as a crowned King in glorious robes and splendor in the sky, or in some miraculous time in past history, but never present (which is the only reality).  But the Holy is always right here, equally now as ever.  The only thing that changes is how we choose to perceive it.  In the Quran, the Holy says,

We are nearer to a person than his jugular vein.
(Quran 50:16)

and the Torah says

It is not in heaven, that you should say,

'Who will ascend into heaven for us and bring it to us,

that we may hear it and do it?'

Nor is it beyond the sea, that you should say,

'Who will go over the sea for us and bring it to us,

that we may hear it and do it?'

But the word is very near you,

in your mouth and in your heart,

that you may do it.

(Deuteronomy 30:13-14)

Because our minds are not present, separate from nature, we think the Holy is also somewhere else, separate from nature, and we think the Holy in front of our eyes is insignificant and silly, so we continually condemn and trample the Holy.  We mistreat and reject each other, we mistreat and reject nature, not realizing we are mistreating and rejecting the Holy:

In the Tao Te Ching, the Holy speaks:

Because people do not understand,
they have no knowledge of me.
Those who know me are few;
Those who abuse me are honored.
Therefore the Sage wears rough clothing
And holds the jewel in his heart.
(Tao Te Ching 70)

Repeated in the Tao Te Ching:

He who takes upon himself the humiliation of the people
is fit to rule them.
He who takes upon himself the country's disasters
deserves to be King of the Universe.
(Tao Te Ching 78)

In the Christian Gospels, the Holy says:

I was a stranger and you did not take me in, naked and you did not clothe me, sick and in prison and you did not visit me. (Matthew 25:43)

and

The world did not know him.
He came unto his own,
and his own did not receive him.
(John 1:10-11)

The Jewish Tanach says the same about the Holy:

The stone which the builders rejected
Has become the chief cornerstone. (Psalm 118:22)
   
The Divine says in the Bhagavad Gita:

Not knowing my transcendent nature as the sovereign Lord of all beings, fools condemn me incarnated as a human.  (Bhagavad Gita 9:11)

And the Dhammapada of Buddha says of this same Holy:

The world may hate  him
but good people love him. (Dhammapada 6)

The  master endures insults and ill treatment
without reacting. (Dhammapada 26)

S&P Testing Overhead 50-day Resistance

Yesterday's action in the market was quite bullish. The market opened lower and sold off modestly, but then the selling began to dry up and the market started to climb. By the end of the session, the market had recouped all its losses and closed in positive territory.

The positive sentiment continues this morning, despite some negative headlines, and the SPX is currently trying to break above its overhead 50-day average at 1304. This would be a bullish technical sign.

The market is ignoring a weak durable goods report this morning, which showed orders for February fell 0.9% when a gain was expected. Coupled with yesterday's housing numbers, February is looking like it was a weak month, but hopefully will mark a low point.

Commodities are continuing to move higher, with gold prices up to $1446, and silver prices up for a 5th straight day to new highs. Oil prices are also higher again, above $106. Yesterday, Leon Cooperman said that he thinks the consumer and the economy should be okay unless oil tops $125, at which point high oil prices could become problematic.

Asian markets were mixed overnight, with no real new news. Europe is higher this morning, despite a raft of negative news there. Moody's downgraded about 30 banks in Spain, while the Portugese PM resigned after failing to pass austerity measures there.

The 10-year yield is higher at 3.38%; and the VIX is falling -5.2% back down to 18.15, signaling traders expect a decline in market volatility.

Trading comment: If the S&P holds up today, and closes above its 50-day, it would be the first sign that this correction is nearing an end. The next step is to find those stocks that have held up the best during the correction. These are the stocks with the highest relative strength currently, and should provide leadership in the next leg higher.

I think the baton has been passed from many of the cloud and networking stocks, with lots of energy and materials stocks moving to the forefront. I started putting money to work yesterday, and will do more so today. Good luck.

BREAKOUT IMMINENT

How many times have we heard this one? The miners are lagging. It's a sign that gold is topping.  

Absolute baloney!

The miners aren't lagging, they are consolidating in an extremely bullish triangle continuation pattern.

I said in the Tuesday report that the miners would probably test the upper trend line this week and maybe even breakout. We may get that test as early as tomorrow.

Folks this is now moving into the momentum stage. During this phase of the C-wave we will see gold and silver grind higher day after day. It's not unusual to see the metals rise at a 70 or even 80% clip (7-8 days out of 10 are up days) during the final two daily cycles up in the parabolic blow off top that always unfolds as a C-wave comes to an end. 

The momentum phase is just now starting. 

Eric Cantor’s Pro-Growth Call

Economic growth over the past ten years has been less than 2 percent annually. And this is a mighty soft economic recovery going on right now, following the very deep recession.

So it’s appropriate enough that Republican House Majority Leader Eric Cantor unveiled a strong pro-growth economic plan at Stanford’s Hoover Institution this week. Cantor is afraid the Republican budget-cutting message is a little too austere, so he’s attempting to balance the necessary budget cuts with a pro-growth, tax-and-regulatory reform message.

Cantor focuses especially on getting business tax rates down to at least 25 percent. He also proposes a tax holiday to repatriate the foreign earnings of U.S. companies. So many CEOs have made the same argument. And this was done successfully in 2004-05. If enacted, maybe $1 trillion in cash will flow back home for new investment and jobs.

But no sooner did Cantor make this speech, than the Treasury shot down any idea of a corporate-tax holiday. I guess this is the same Treasury that works for the Obama 2.0 pro-business president. Or not.

Cantor is completely right on this. He’s also right on his other proposals to lower trade barriers and put a freeze on regulatory burdens.

Mr. Cantor also has an interesting proposal to deal with the backlog of 700,000 patent requests in order to speed American innovation and small-business creation. He also believes the visa system should be streamlined to bring in high-skilled workers from abroad in order to create new jobs at home.

It will be interesting to see if Cantor’s growth message is taken up by other Republican leaders, most particularly Paul Ryan. Will Mr. Ryan include tax-and-regulatory reform with his tough budget-cutting proposals?

The only thing missing from Eric Cantor’s speech was a monetary hook to stabilize the dollar. The GOP needs a King Dollar policy. Otherwise, all the best tax cuts will be blunted by a sinking dollar and rising inflation.

But bravo to Eric Cantor for getting out a growth message. And let’s see if the GOP presidential wannabes pick up on the need for growth plan.

New Home Sales For Feb. Very Weak

The market is lower in early trading, pulling back for a second day after running into overhead resistance on Friday.

The new home sales report for February was very weak at a rate of 250,000, which is close to a record low. The housing market has been very slow to bounce back, and I think it likely won't see anything sustainable until we get through more of these foreclosures that were halted recently and put on hold.

In corporate news, Jabil Circuit (JBL) reported strong results and its stock is higher, while CREE cuts its guidance and is down sharply.

Asian markets were mostly lower overnight, with Japan still struggling to restore power at the damaged nuclear facilities.

Oil and gold are rallying again, with oil prices above $105.50 and gold prices back to $1441. Silver also hit new 30-year highs this morning.

The 10-year yield is lower at 3.28%; and the VIX is 2.2% higher to 20.66.

Trading comment: The S&P is moving lower after being rebuffed at its overhead 50-day average on Monday. This is the normal course of corrections, which is why I said to exercise patience. Hopefully we will see the sentiment indicators rise in bearishness again, as that would set up another good buying opportunity. Many former growth leaders, including cloud stocks and networking stocks, look to have lost their leadership position in the market. So when this correction runs its course, it might be time to look for some new names to lead the next leg of this market. Stay tuned.

Last day

I think we are fast approaching the lift off point for the parabolic rally that always caps a C-wave advance. Once that begins there will be no more good entries into this market. All pullbacks will be mild or intra-day only. I've done everything I can think of to get people on board before the move starts. Hopefully you took the advice and got in at the intermediate cycle low in January or at the daily cycle low last week.

I've cautioned repeatedly to ignore the technicians trying to call tops. These analysts just don't understand what is happening to the dollar. This isn't about technicals. It's about fundamentals. This is about a currency crisis. Folks in a currency collapse you would have to be an idiot to go to cash. I guarantee the market taken as a whole isn't stupid. It's going to find a way to protect itself. That will of course be to exchange dollars for gold, silver and mining stocks as the dollar collapse starts to intensify.

There will undoubtedly be a never ending stream of top callers all the way up. But the market is going to make these people pay dearly for jumping off the bull too early. Overbought is going to be a meaningless term in the days and weeks ahead. The only thing that will matter is finding something to buy in order to protect ones purchasing power from the currency crisis. 

This will not end until the dollar puts in the final three year cycle low.

This will be the last day for the 15 month special. 15 months for the price of 12 ($200). Here is the link to the premium website. Scroll down to the bottom of the page and click on the subscribe link. Enter 'smt15' in the promotional code box and click continue. That will take you to a page with the 15 month offer.

The offer has now ended.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET:


THE MARKETS
-Jim Lacamp, Macroportfolio Advisors portfolio advisor
-Michael Farr, Farr, Miller & Washington president
-Mike Holland, Holland & Company chairman


SINKING DOLLAR SINKING THE ECONOMY?
-Steve Forbes, Forbes Media chairman
-David Gilmore, FX Analytics partner

DEBT THREAT: U.S. CLOSE TO INSOLVENCY?
-Steve Moore, Wall Street Journal editorial board
-Robert Reich, former Clinton Labor Secretary

ONE-ON-ONE WITH FORMER DEFENSE SECRETARY DONALD RUMSFELD

OIL SHOCK
-John Kilduff, Again Capital
-Kevin Kerr, Kerr Trading

Please join us at 7pm ET on CNBC.

Consolidating Yesterday's Gains

There isn't much new in the way of market moving news this morning. The market is only slightly lower in early trading, after yesterday's outsized gains. Sentiment is still improving due to the absence of headlines suggesting any deterioration in the Libya and Japan situations.

I haven't seen any economic reports moving the market. In corporate news, Walgreen's (WAG) reported a slightly disappointing quarter and its stock is lower.

Asian markets were higher overnight, led by a 4.4% surge in Japan. The dollar is up a bit today, which is weighing on most commodities, but oil and gold are both higher. Oil prices are back up to $103.50, and gold prices are just below $1430.

The 10-year yield is higher to 3.33%; and the VIX is down another 2% back to 20.20.

Trading comment: I spent $60 to fill my tank last night, and I don't even want to know how much my wife is spending to fill the SUV she drives. This type of sticker shock will start to affect the psyche of the average consumer, and doesn't bode well for consumer spending, especially if it lasts until we get into the summer driving season. So that's something to watch.

But in the near-term, the S&P 500 hit resistance at its overhead 50-day average (near 1300). Healthy action would be for the market to consolidate here for a little bit, and then make a successful stab through that overhead resistance. In the absence of further bad news, I could see this happening. Bearish sentiment got a little heated, and we also have quarter-end approaching where portfolio managers will look to put money to work and do some window dressing, and hedge funds will cover shorts that are under pressure.

Q1 Slowdown: Caveat Emptor

Caveat emptor: The first-quarter economy is slowing and inflation is rising. A month ago, economists were optimistic about the potential for 4 percent growth. Now they are marking down their estimates toward 2.5 percent. Behind this, consumer expectations are falling while inflation fears are going up.

A recent CNBC All American Economic Survey revealed that 37 percent of respondents expect the economy to get worse in the next year. That’s up about 15 percentage points from the December poll. The key reasons? Worries over rising food and fuel costs. Respondents anticipate prices to climb 6.6 percent over the next year. That’s double the 3 percent inflation registered in the December survey.

Supporting the CNBC poll, the early March consumer sentiment index from the University of Michigan dropped sharply, with the reading for consumer expectations falling 14 points. Additionally, one-year inflation expectations have risen to 4.6 percent in March from 3.4 percent in February.

Of course, everyone has been badly shaken by the terrible disaster in Japan. For the U.S. economy, supply-chain disruptions will damage growth. Also, the civil war in Libya and the broad unrest across North Africa and the Middle East have fueled a mild oil-price shock, also subtracting from U.S. growth.

So if the economy ending in the March quarter slows to less than 3 percent, it would mark the fourth-straight sub-3 percent GDP reading. Despite the strength in the manufacturing sector and rising corporate profits, that reading would underscore the softness of this recovery cycle.

The main cause of today’s consumer angst is undoubtedly the jump in gasoline prices. Nationwide, the pump price has climbed to $3.55 a gallon, up from $3.16 a month ago and $2.82 a year ago (for a 26 percent one-year jump). The last leg of this gas-price jump can be attributed to the $10 or $12 oil-price spike, resulting from supply worries in the Arab world. But it’s worth noting that gasoline moved from $2.70 to $3.15 just as soon as Ben Bernanke announced his money-pumping QE2 strategy in late August last year.

All things the same, the gasoline price could knock a half percent off growth and add a half percent to inflation. In fact, the consumer price index has registered three consecutive outsized monthly gains, and is running 5.6 percent at an annual rate through the three months to February. This increase is led by a 79 percent increase in gasoline prices and a 5 percent gain in food prices.

But food commodities have jumped 37 percent over the past year. So there’s more coming at the retail price level.

Meanwhile, the producer price index has spiked for three straight months and is up nearly 14 percent at an annual rate for the three months ending in February. Inside the PPI, wholesale food is up 22 percent during the three-month period through February. Plus, the import price index operating through the weak dollar is up nearly 7 percent over the past year. There’s a profit-warning here: Spiking raw-material and energy wholesale prices will pinch future corporate profits.

The dollar looks weaker and weaker. Even when the G7 intervened to lower the yen and help the beleaguered Japanese, the dollar rose 2 percent relative to the Japanese currency, but fell against all the other major currencies. Not a good sign for the greenback.

It used to be known as King Dollar, but today the greenback is closing in on all-time lows when measured against various currency baskets.

And the Fed keeps creating new dollars. Measured by the St. Louis Fed, the monetary base has grown $360 billion since early November — a 54 percent annual growth rate — as Mr. Bernanke continues his money-pumping plan.

So the Fed is pouring in new money, the dollar is sinking, and inflation is rising. Many believe this ultra-easy-money and cheap-dollar approach will cause the economy to boom. They said the same thing about the $800 billion spending stimulus. But the Keynesians are wrong. The recovery remains soft, and it may be getting even softer as of the winter-quarter results.

One final point: The decline of the dollar and the rise of inflation seem to be offsetting, or neutralizing, the effect of the December tax-cut extensions. Initially, those extensions helped bolster consumer spirits and economic growth. But the onset of food and fuel inflation from the cheap dollar looks like a tax hike that offsets a tax cut.

This is just what we saw during the George W. Bush years, when the falling dollar caused asset bubbles, commodity inflation, and oil spikes, all of which ended up undermining lower tax rates.

The world’s not coming to an end. Neither is the economic recovery. But we can do a whole lot better.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET:


THE MARKETS

-Don Luskin, Trend Macro chief investment officer
-Brett Arends, WSJ & Marketwatch columnist
-Lee Munson, Portfolio Advisors chief investment officer

Q1 SLOWDOWN? CAVEAT EMPTOR?

-Keith McCullough, Hedgeye Risk Management CEO
-Joe LaVorgna, Deutsche Bank chief U.S. economist

OIL SHOCK

-John Kilduff, Again Capital partner
-David Goldman, former Bank of America Fixed Income head

ONE-ON-ONE WITH DONALD TRUMP

Please join us at 7pm ET on CNBC.

Stocks Rally On Improved Sentiment

The market is rallying nicely in early trading, on no real bullish news other than some slight improvement in the Japan nuclear situation. But the escalating military action in Libya, the rise in oil prices, and a disappointing housing report don't really support the renewed buying enthusiasm.

A better explanation is that bearish sentiment last week simply grew too high, and today's rally is a continuation of the unwind of some of that bearish sentiment. For example, the CBOE put/call ratio averaged a very high 1.06 for all of last week. And the AAII survey showed bears outnumbered bulls by 14%. Those are some of the most bearish sentiment readings we have seen since last August, which we know preceded a strong uptrend.

In corporate news, the big merger announcement over the weekend is that AT&T is buying Deutsche Telecom (T-Mobile) for $39 billion. The deal should bring some scrutiny from regulators, so we will have to see if AT&T is forced to make any concessions.

The dollar is nearly unchanged, while most commodities are higher. Oil prices are back to $102.20, and gold is also higher today to $1433.

Asian markets were mixed overnight, with Japan closed for a holiday, Hong Kong up 1.7%, and China lower by 0.1% after raising its reserve requirement ratio another 50 basis points. China continues to tighten monetary policy, and many are worried that the country will experience a hard landing as a result of their property bubble.

The 10-year yield is higher to 3.35%; and the VIX is -14% lower back down to a more reasonable level at 20.89.

Trading comment: Despite the strong rally this morning, the S&P 500 needs to close above its overhead 50-day average, which currently sits around 1303. Lots of leading stocks also continue to build their bases that began during this correction.

So even if we may have seen the lows for this correction (just a possibility), it looks like the market and leading stocks still need to put in a little more time rebuilding their bases before they are ready to launch new uptrends. But I'm still glad I dipped my toe in the water last week while stocks were down to add some exposure at attractive levels.

END GAME

For months and months I've been warning investors that the dollar was going to come under extreme pressure sometime this year. I expected it to probably happen in the spring. Many people thought I was nuts. They were sure it was the Euro that would collapse, despite the fact that the EU is doing everything they can to protect their currency while Bernanke is doing everything he can to destroy ours.

On Friday the last confirmation occurred to signal the final collapse is now underway. On Friday the November yearly cycle low was violated. Cyclically that is a major catastrophe.

We are now going to see the dollar get absolutely hammered for the next couple of months. The viability of the dollar as a currency will be questioned. There is a decent chance it may start to lose it's status as the world's reserve currency. (Coincidentally about the time everyone becomes convinced the dollar is going to hyperinflate that will be the point where the three year cycle low will bottom and we will see an explosive rally, along the same lines as what happened in late `08.)

This is what all the top pickers in gold and silver fail to understand. They are all trying to call a top based on charts without any understanding of what is happening to the currency. 

In a currency collapse the market will flee into assets that will retain their purchasing power. Four weeks ago we went past the point of the stock market being able to protect one from Ben's printing press any longer. So buying stocks as protection is no longer a viable solution.

Four weeks ago spiking inflation rose to the point where profit margins are now being hit. Ben will no longer be able to prop up the stock market by further debasing of the currency. Stocks have now decoupled from their inverse correlation with the dollar and will now follow the dollar down.

 The more Ben prints and the faster the dollar collapses, the faster the stock market is going to fall...and the quicker the economy is going to roll over into the next recession.

What will happen is that liquidity will rush into the commodity markets as the only true protection against the accelerating currency crisis.

This is why one has to ignore the top pickers and chartists. Overbought oscillators and stretched conditions are meaningless in a currency collapse. This is all about fundamentals. It's about protecting your purchasing power. You can't do that by exiting the one sector fundamentally best suited to protect you during this storm.

Now isn't the time to be selling your gold, silver or mining stocks, its time to be buying more.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET:


MARKET UNCERTAINTY
- Larry Glazer, Co-Founder of Mayflower Advisors
- Lee Munson, Portfolio Asset Management CIO
- Don Luskin, Trend Macro Chief Investment Officer


LATEST ON CONTAINMENT PROGRESS IN JAPAN
- NBC’s Robert Bazell reports from Toyko.

KUDLOW EXCLUSIVE
ONE-ON-ONE WITH STEVE SCHWARZMAN
ECONOMY: JAPAN; EUROPE; & HIS OPTIMISM HERE AT HOME
Steve Schwarzman, Blackstone Group Chmn, CEO & Co-Founder

RADIATION FEARS IN AMERICA?
- CNBC’s Jane Wells joins us from Los Angeles.

KUDLOW EXCLUSIVE
ONE-ON-ONE WITH DONALD TRUMP

FREE MARKET FRIDAY
***WHERE'S THE ENERGY POLICY?
***JUDGE ATTEMPTS TO OVERTURN WALKER'S CONTROVERSIAL UNION LAW

- David Goodfriend, Fmr. Clinton W.H. Official;"Left Jab" Co-Host/Air America Co-Founder/Fmr. Staffer to Rep. Charles Rangel & Sen. Herb Kohl
- Deroy Murdock, Scripps Howard News Service Syndicated Columnist; Media fellow with Hoover Institution at Stanford University
- Jimmy Pethokoukis, Reuters Breakingviews: Money & Politics Columnist; CNBC Contributor

Please join us at 7pm ET on CNBC.

Cycle low

I'm fairly confident gold has put in its daily cycle low. This will probably be the last chance to enter before the C-wave finale starts the parabolic run to the top. Stops have been raised. Risk is now about as low as it's going to get. 

I will open the 15 month special one more time for any late comers that want to ride this final run. Enter smt15 in the promotional code box and click continue to link to the special offer page.


Here is the link to get you to the subscription page.

Libya Backs Down After UN Decision

The market is nicely higher in early trading, following yesterday's solid gains. But today is both Friday and also options expiration day, so anything could happen by the close today.

Oil was higher after the UN decision to implement a no-fly zone over Libya, but Libya has since backed down and issued an immediate ceasefire. This has calmed oil prices, which are back near $101.

Most other commodities are higher, including gold which traded back to $1420. Overnight, the G7 countries intervened to stall the Yen's ascent vs. the greenback, so the Yen is lower today, but the dollar is slightly weak as well.

In Japan, the above news items have overshadowed the nuclear situation for the moment. Japan's stock market rallied another 2.7% overnight. But other Asian markets were lower after China raised its reserve requirement ratio another 50 basis points.

In corporate news, Nike (NKE) is getting hit after an earnings miss, which is weighing on the retail index. Cisco (CSCO) is higher after announcing its first ever dividend. About time, since the company is sitting on $40 billion of cash. Financials are leading the market after banks started to announce higher dividends and stock repurchases.

The 10-year yield is higher to 3.27%; and the VIX is down another 10% near 23.80.

Trading comment: Networking stocks are materially underperforming the last 2 days, which could be a bit of a warning sign considering they have been market leaders. Despite the bounce the last 2 days, the SPX is still trading below its overhead 50-day average. So my best guess is that this is the oversold bounce I was looking for earlier in the week. But we are likely to get another pullback in the market in the next couple weeks, and that should present a better buying opportunity than today. Be patient.

STOPS HAVE BEEN UPDATED

I'm fairly confident Tuesday marked the daily cycle low, barring another exogenous event coming out of Japan in the next day or two. I have updated stops and trade trigger on the website .

Hope from Japan

Better news from the Japan crisis today, as the nuclear power company Tepco appears to be on track to complete a power line to the Fukushima nuclear power plant this afternoon Tokyo time.

If they can start running water into plants No. 3 and No. 4, to replenish the spent nuclear fuel pools, then potentially the apocalyptic fright of massive radiation could be off the table.

No one knows, certainly not I. So much of this story is unknowable. But at least there’s hopefully some good news.

The human toll in Japan is already massive. That’s a tragedy. But if somehow the meltdown story leading to massive radiation can be stopped, that would be a sign of hope for the Japanese people and all the rest of us.

One of the many fear gauges for this story is the U.S. and world stock markets, including Japan’s. While the Nikkei fell 1.4 percent Wednesday, the Dow managed a 1.4 percent gain today, up 161 points. It could be nothing more than a relief rally.

Traders are pointing to a strong factory report from the Philly Fed and a solid manufacturing gain for the index of industrial production. You want to say that the U.S. economy will survive the Japanese crisis, and undoubtedly that view is correct. But no one can rule out a worst-case Japanese story. Not yet, anyway.

And should that worst case ever occur — and let us pray it does not — no economy, including ours, will be spared.

But let me be hopeful on the Japan nuclear crisis somehow being solved. If that happens, the U.S. economic outlook is still 3 percent, or reasonably good.

All the economic stuff is still a sidebar to the Japanese tragedy. So perhaps as a sidebar to the sidebar, inflation pressures in the U.S. continue to rise. Today, for example, the consumer price index showed another big gain, the third straight monthly rise. This comes to 5.6 percent at an annual rate over the past three months. Producer prices paid by businesses have jumped 13.8 percent annually over the past three months. And import prices paid by everybody are up 6.9 percent over the past year.

Mr. Bernanke still thinks it’s all temporary — just a minor bulge in food and energy. But inflation expectations in the bond market and in consumer surveys show increases, not declines. Gasoline is holding at $3.55 at the pump. A year ago, it was $2.79. I hope the Fed is paying attention.

Stocks Bounce From Oversold Levels

The market is nicely higher in early trading, as news of the effort to cool the nuclear plans in Japan intensifies. There were photos of military helicopters dropping water on the reactors, although it appeared much of it was dispersed by the wind. The temporary power lines are said to be closer to completion as well.

The Yen continues to rally, at the expense of the dollar. The weak dollar is helping boost most commodities. Gold is one of the few that is lower today, falling back to $1393. And oil prices have rallied back to the $100 level.

In economic news, the Philly Fed index surged to a 25-year high of 43.4. We have stated that the manufacturing sector has been a surprising area of strength, and this report certainly supports that notion.

In corporate news, Fedex (FDX) reported earnings and offered a strong forecast. That news is helping boost its shares more than 5%, and improving sentiment in the transportation sector.

Despite the efforts in Japan, radiation concerns weighed on sentiment overnight and led to losses in Asian markets. But Europe was higher this morning.

The 10-year yield is higher to 3.27%; and the volatility index (VIX) is down -12% after yesterday's huge spike, back to a still lofty 25.91.

Trading comment: I have commented on how oversold the market is, but you never know how far back the rubber band will be pulled. Today we are getting a snapback, with the markets rallying strong in the early hours. Hopefully the strength will hold up into the close, and be accompanied by some volume.

Corrections don't end overnight, so today probably is not the day to do your buying. Most likely, the market will rally up to some resistance levels, such as the now overhead 50-day moving average of the S&P 500 around 1300, and then come back down again. That is often the pattern that creates a more solid trading bottom. So that's the playbook we're working from.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET:


MARKETS IN TURMOIL
- Brett Arends, columnist The Wall Street Journal
- Joe Battipaglia, Stifel Nicolaus Market Strategist
- Pat Kernan, Cardinal Capital Management trader


FOOD INFLATION

- Art Laffer, Chief Investment Officer, Laffer Investments; Fmr. Reagan Economic Advisor
- Dan Greenhaus, Miller Tabak & Co Chief Economic Strategist

DISASTER IN JAPAN: NIKKEI JAPAN'S FINANCIAL/BUSINESS UPDATE
- Sri Jegarajah joins us live from Tokyo

ECONOMIC IMPACT OF JAPAN DISASTER HERE IN U.S.
HOW LONG WILL IT TAKE TO GET THE SUPPLY-CHAIN BACK UP?
GAME THEORY -- WHAT WOULD IT MEAN HERE IN U.S. IN WORST CASE SCENARIO?

- Brian Wesbury, First Trust Advisors Chief Economist
- Niall Ferguson Harvard University Professor "The Ascent of Money" Author
- Keith McCullough, Founder & CEO of Hedgeye Risk Management; CNBC Contributor

WINNING THE WAR AGAINST SPENDING & GOVT. UNIONS
Gov. Scott Walker (R-WI) joins us.

WASHINGTON TO WALL STREET
ARE TEAM OBAMA POLICIES PUTTING A CRIMP ON PRODUCTIVITY & GROWTH?
WHY ISN'T OBAMA WHITE HOUSE HELPING BUSINESS?
WHERE'S BILL DALEY?
WHERE ARE THE CORPORATE TAX CUTS?
- T.J. Rodgers, Cypress Semiconductor CEO
- Jim Murren, MGM Resorts Chmn & CEO

Please join us at 7pm ET on CNBC.

One-on-One with Mitch McConnell

Here's the transcript from my recent interview with top Senate Republican Mitch McConnell. One of the key points he made from my perch is that he wants a broad-based budget deal, but absolutely no tax hike.

LARRY KUDLOW:
Senator Mitch McConnell, welcome back to The Kudlow Report, sir.

SENATOR MITCH MCCONNELL:
Glad to be with you, Larry.

LARRY KUDLOW:
Let me just begin with this catastrophic Japanese story, the tremendous human toll it's taking and, of course, the nuclear power worries too. First, will efforts be made in the Senate to help our friends in Japan?

SENATOR MITCH MCCONNELL:
Yeah. If it needs Senate approval, we certainly will be there for helping our friends in Japan. What a horrible environmental catastrophe they're experiencing, the loss other human life, and all the rest. We're gonna be there for them in every way possible.

LARRY KUDLOW:
What kinda stuff is being discussed right now in the way of assistance?

SENATOR MITCH MCCONNELL:
I assume that our emergency services experts are interacting with the Japanese. I know they are. The USS Ronald Reagan is either there or on the way there, you know, which-- 'cause, apparently, they would like additional helicopter support in delivering supplies. We're gonna do everything we can to be helpful.

LARRY KUDLOW:
And, the issues of the worries about a nuclear meltdown in Japan, will that effect Senate policy? Will there be hearings held to look at our whole nuclear and our energy program in the wake of these Japanese problems?

SENATOR MITCH MCCONNELL:
Well, I think it's important not to rush to a conclusion about a major American energy policy in the wake of a disaster. For example, we all vividly recall last summer the BP oil spill. One of my colleagues said, "You know, when an airline-- when-- when an airplane goes down, you don't quit flying." I mean, we need to try to learn from what happened there. But, to rush to conclusion about-- what this means with regard to our-- policy in the future for nuclear power, I think it's premature.

LARRY KUDLOW:
No shutdown of nuclear licensing and things of that sort?

SENATOR MITCH MCCONNELL:
Well, you know, it took us 30 years to get back on track after Three Mile Island. I expect that this will-- produce some difficulty. I just don't think we oughta make American domestic energy policy based upon something that happens in another part of the world. Well, we try to learn from the mistakes that were made, and apply them.

LARRY KUDLOW:
Let me talk about American budget policy. You've recently said, "Not a single one of the 47 Senate republicans will vote to raise the debt ceiling unless some credible effort, unless something credible is done about our debt." Can you expand on that? What, "something credible" would be necessary to vote for an increase in the debt ceiling...

SENATOR MITCH MCCONNELL:
Well, first, let's just talk about the situation. We have now a divided government. The American-- public last November-- decided-- as one pundit put it, "Issue a restraining order against the actions of this administration over the first two years." A divided government frequently has done very important things. Think of Ronald Reagan and Tip O'Neill. Fixed social security in '83. Ronald Reagan and Tip O'Neill did tax reform in '86.

Bill Clinton and the republican Congress did welfare reform in '96. And, Bill Clinton and republican Congress actually balanced the budget, believe it or not, in the late '90s. This is a time to do important things. Our debt situation is extremely dangerous. We now have a $14 trillion cumulative debt, the size of our economy. We begin to look a lot like Greece.

Over and above that, we have over $50 trillion in unfunded liabilities in Medicare or Medicaid and social security, promises we've made that we cannot keep. This is an important time in our history to begin to get our fiscal house in order. And, the President-- so far, is remarkably passive, just sort of sitting on the sideline. So, what I have said, to get back to your question, there are 53 democrats and 47 republicans.

Fifty-three democrats can vote for a clean debt ceiling increase if they want to. But, 47 republicans, I'm quite confident, are gonna insist that we use that opportunity, which is all about our debt, to do something important about our debt.

And, I've been trying to incentivize the President every way I can, to come to the table. He doesn't have to lay it out publicly. We need to have private discussions and see what we can come up with that would be an important accomplishment for the country.

LARRY KUDLOW:
But, to make it credible, I mean I'm gonna guess you have a couple of months. To make it credible, would you, for example, insist on any conditions from the White House to have republicans vote for a higher debt ceiling? Specific conditions--

SENATOR MITCH MCCONNELL:
Well, I'm not gonna start laying out a potpourri of options. I think they know and we know what would be significant. And, we should be discussing which of those significant items should be added to the debt ceiling. Think of putting an ornament on a Christmas tree. Add it to the debt ceiling, as a condition for having bipartisan approval, of raising the debt ceiling. And, I'm not gonna get into the specifics now--

LARRY KUDLOW:
How about a spending--

SENATOR MITCH MCCONNELL:
but we all know what our--

LARRY KUDLOW:
--limitation--

SENATOR MITCH MCCONNELL:
--we all know what are problems are.

LARRY KUDLOW:
How about a spending limitation? A number of republicans have raised this. Senator Corker has raised this, something like 20, 21 percent of GDP. If I'm not mistaken-- your whip, Senator Kyl has raised it also, Senator Mike Lee and others. A spending limitation, a debt limitation, an entitlement package. It's kinda hard to do in the next six or eight weeks. But, would those qualify as conditions--

SENATOR MITCH MCCONNELL:
All of those are the kinds of things that would be considered significant by the markets, by the American people, and by foreign countries. And, we're in the process, within the republican conference, of looking at statutory solutions. Senator Corker's got a creative and interesting one. And, we're also looking at a Constitutional amendment that would not be a good candidate for a debt ceiling 'cause the President, under out Constitution, is not involved in a Constitutional amendment to balance the budget. He doesn't play a role in that.

Entitlement reform. A lot of study has already been done. The President's own entitlement debt reduction commission has done a lotta study over the last year w-- whose-- all of these issues have been studied thoroughly. What is lacking so far is the political will to tackle them.

LARRY KUDLOW:
Senator Schumer and some others, I believe Senator Durbin also, they want to have a big package deal discussion. Spending cuts, entitlement cuts, and also taxes. And, I wanna ask you, down through the years, we've had these big, grand design deals. Are taxes on the table for such a deal?

SENATOR MITCH MCCONNELL:
Taxes are not on the table. We don't have this problem because we tax too little. We have this problem because we spend too much. And, I've made it clear, both publicly and privately, that as a result of last November's election, tax increases cannot be considered as part of the solution to any of these problems.

LARRY KUDLOW:
Are there any movements in the Senate Finance Committee to lower the business tax rate structure? President's talked about this. He's sort of making a charm offensive with business. A lotta people on Wall Street took notice of that. He's goin' to be a centrist. He's got Bill Daley as his new Chief of Staff. Is the White House pushin' for business tax reform? Is the Senate pushin' for business tax reform? Are you pushing for business tax reform?

SENATOR MITCH MCCONNELL:
Yeah, we'd like to see the American corporate tax rate be competitive with the rest of the world. And pretty soon, we're gonna have the the highest corporate tax rate in the world. I don't think that's good for business. By the way, we all be-- oughta be ratifying trade agreements, not just the Korea deal, but the Panama, Colombia deal as well. We oughta be doin' all of those things. And I'm waiting to see whether this is just a rhetorical shift on the President's part courting business whether he's gonna back it up with anything real. And, I think doin' work on lowering the corporate tax rate, passing trade agreements, all of that, would have reality match up with rhetoric.

LARRY KUDLOW:
Speaking of rhetorical shifts-- President, in his news conference Friday, last Friday, said he was in favor of domestic drilling, domestic oil and gas production. Do you believe him?

SENATOR MITCH MCCONNELL:
Well, I remember one previous President said, "Watch what we do, not what we say." And, it is no question this administration has made it tougher to drill both on and offshore in this country. It's harder to get permits. We've had to suffer through an endless moratorium in the gulf after the BP spill that is totally unpopular all across the southeastern United States because it's costing us jobs.

One of my colleagues, Senator Vitter, on the floor of the Senate actually read the list of rigs, named them, that are now-- that used to be in the gulf, that are now in places like West Africa and other places. They've been moved around the world, and the jobs have gone along with them.

So, the question is not what the President's saying, but what he's doing. We need to quit this anti-production-- view that's been pervasive. It needs to stop. The anti-pro-- production view that's so pervasive in the administration needs to change. He's the President, he can change it if he wants to.

LARRY KUDLOW:
Do you blame him for $3.57 gasoline at the pump, which many economists are saying will slow the economy and raise the inflation rate? Do you blame the--

SENATOR MITCH MCCONNELL:
No, I'm--

LARRY KUDLOW:
--President?

SENATOR MITCH MCCONNELL:
--not gonna lay that just on his shoulders. But, he is you know, in terms of domestic production, this has been an administration that's very hostile to domestic production, not just in the gulf, but in Alaska and other places, to the extent that we could reduce our dependence on foreign oil. I think we all agree that would be good. But, we're not gonna do that any time soon with the proliferation of electric cars. It's just not gonna get the job done. So, we need to be straight with the American people. And, that involves opening up more of our substantial domestic supplies of both oil and gas.

LARRY KUDLOW:
Do you blame Fed Chairman Ben Bernanke for printin' too many dollars? Value of the currency's goin' down. Food commodities are skyrocketing. Energy commodities are skyrocketing.

SENATOR MITCH MCCONNELL:
Well, I'm not an expert on Fed policy. But, anyway, we were just talking about gas prices. Nothing will send the cost of everything up faster than an increase in gasoline prices. Just a penny up, you know, will cost us hundreds of millions of dollars a year. Everybody's very sensitive to gas prices in this country.

LARRY KUDLOW:
When you heard PIMCO's Bill Gross, the big investment manager out west. He says he's pulling out of the U.S. Treasury Bond market. What kind of signal do you take that to be? What do you and the Senators feel that kind of negativism toward bonds pushes the deficit reduction, pushes the budget issue to the front page, and to the front of your agenda? Are we losing time on this? If too many Bill Grosses pull out, who's gonna buy our debt?

SENATOR MITCH MCCONNELL:
Well, I think the message is this is a serious problem, and it's a problem now. I mean, you get the impression the President hopes to finesse this past the next election. That's fine if it'll wait that long. There are many experts who come and talk to us here in the Senate who believe we need to act, and act now.

And, as I've suggested, Larry, I think the time to act is-- in connection with the debt ceiling. We all know the kinds of actions we can take that would be viewed about the bond market, for example, as an indication the American government is gonna get its house in order. We know what the steps are that need to be taken. We need to reach out and grab them with both hands, and pass them.

LARRY KUDLOW:
All right, Senator Mitch McConnell, Republican Leader, we appreciate it very much, sir.

SENATOR MITCH MCCONNELL:
Thank you, Larry.

LARRY KUDLOW:
Great. I really can't thank you enough.