Stocks Diss Oil, for Now

Big economic-growth stats are trumping oil prices and the Mideast tinderbox. In optimistic trading on Thursday, stocks soared nearly 200 Dow points. Oil barely fell to just under $102 a barrel. Know what? The market may be shouting out that the recent oil spike is not going to derail economic recovery.

Of course, nobody can predict events in war-torn Libya and other hotspots, or, for that matter, in Saudi Arabia. Sure, if Saudi Arabia erupts into violence on its so-called “day of rage” on March 11, oil prices will spike like we’ve never seen before, causing incalculable damage to the U.S. and world economies.

But for now U.S. stock markets have pushed that scenario aside. They’re much more interested in ISM reports showing a mini economic boom.

On the manufacturing side of the ISMs, 61 percent of survey participants reported better business. For non-manufacturing services, 60 percent of companies on the composite index and almost 67 percent on the overall business-activity index improved. Together, these supply-manager reports suggest as much as 4 to 5 percent economic growth.

Stocks surged on Thursday when the services report was first put out. But additional good news helped stoke the market enthusiasm.

On the employment front, there was a big decline in initial jobless claims, which fell to 368,000. The four-week average of jobless claims now stands at 388,500, the lowest reading since July 2008. And the so-called “whisper number” for Friday’s nonfarm payrolls report is approaching 300,000 new jobs.

In addition, car sales have surged to 13.4 million at an annual rate, consumer confidence has unexpectedly improved, and same-store retail sales are well above consensus, coming in over 4 percent in the latest report.

So while stocks have been highly volatile over the past few weeks — since Libyan oil fields were shut down — bullish trading suggests that in its wisdom Mr. Market not only believes economic recovery will survive the $10 or $15 jump in oil prices, but that the stock rally is far from over if the economy produces unexpectedly strong growth.

That said, it’s also possible that we experience unexpectedly strong inflation.

While Fed head Ben Bernanke remains in full denial, those ISM reports show mounting inflationary pressures. Business-prices paid are rising at least 20 percent above year-ago. Commodity indexes are running 30 to 40 percent ahead of year-ago. Even the consumer price index has registered back-to-back increases of four-tenths of 1 percent for December and January, coming to 5.1 percent at an annual rate.

Mr. Bernanke believes that oil, gold, commodities, and other upward price pressures will be transitory, so he is determined to keep printing new money through his much-criticized QE2 program. The dollar is suffering. He might be better advised to look across the ocean to European central banker Jean-Claude Trichet.

This week, Trichet signaled that he may raise the ECB target rate in April in order to stop the oil shock and prevent other price increases from spreading. Trichet has become the Paul Volcker of Europe. He will not monetize the oil increase. He is exactly right.

Ben Bernanke on the other hand looks more like Arthur Burns in the 1970s, back when the Fed increased the money supply in an attempt to fight negative oil-shock effects, but instead monetized oil into a raging stagflation.

In any event, I side with clear-eyed Wall Street forecaster John Ryding, who believes the $10 or so oil-price hike will reduce real growth by only one-quarter of a percent while adding a like amount to inflation. Ryding expects 3.5 percent growth this year.

Historically, a combination of spiking oil prices and an inverted Treasury yield curve signaling ultra-tight Fed money are precursors to inflationary recession. This has pretty much held true for the last six economic downturns. But right now, the oil spike is modest and Fed money printing is ultra-easy. The yield curve is steep and upward sloping, with long-term rates 350 basis points above short-term rates. This argues against recession right now.

And let’s not forget: Corporate profits remain very strong, an extension of the Bush tax cuts is helping the economy grow, and the one-time payroll tax cut may help cushion the oil shock.

So at the moment, barring a blowup in Saudi Arabia, the economy will survive.

In the end, however, a surge in gasoline prices at the pump may be the deciding economic and stock market factor. Pump prices jumped another 4 cents Thursday to a national average of $3.43 per gallon, according to AAA. Gas prices are about 25 percent higher than they were a year ago. Some forecasters are projecting $4 a gallon or more.

If income-producing jobs fall short of Wall Street hopes, the gasoline-tax increase on consumers and small businesses could melt stock market optimism. Besides the Saudi threat, gasoline prices are the biggest if in the economic outlook.

Fed Under Fire: One-on-One with Ron Paul

Fierce Fed critic Rep. Ron Paul (R-TX), head of the House Financial Services Committee, discusses his back-and-forth with Fed head Ben Bernanke over U.S. monetary policy.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET:


THE MARKETS

- Jeff Kleintop, LPL Financial Chief Market Strategist
- Larry Glazer, Co-Founder of Mayflower Advisors
- Jim Iuorio, Options Action Contributor; Director, TJM Institutional Services

OIL SPIKES HIGHER ON MIDEAST JITTERS

- Peter Beutel, Cameron Hanover President
- John Kilduff, CNBC contributor

ONE-ON-ONE WITH RON PAUL … SHOULD BERNANKE START TIGHTENING?

- Rep. Ron Paul, (R) Texas; Budget Cmte. Chair; House Ways & Means Cmte. Sr. Member


WHAT HAPPENED TO THE WASHINGTON'S $60B SPENDING CUT PLEDGE?

- Matt Miller, Washington Post Online Columnist; Public Radio's "Left, Right and Center" Host
- Rep. Tom Price, (R) Georgia

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET:

THE MARKETS

- Keith McCullough, Founder & CEO of Hedgeye Risk Management
- David Joy, Columbia Management Chief Market Strategist
- James Altucher, Formula Capital Managing Director

WISCONSIN BUDGET BATTLE
- Mike Taibbi, NBC News - Madison, WI

STATE BUDGETS VS. UNIONS: SCOTT WALKER II
- Gov. Jon Kasich (R) Ohio

IS BERNANKE IN DENIAL ABOUT INFLATION?

- Robert Reich, Fmr. Labor Secretary; "Aftershock: The Next Economy and America's Future" author; CNBC Contributor; Univ. of CA., Berkeley, Prof.
- Steve Forbes, Forbes Chairman and CEO; Forbes Editor-in-Chief; Fmr. Presidential Candidate; "How Capitalism Will Save Us" Co-Author

WAVE OF REVOLUTION : OMAN, JORDAN; SAUDI ARABIA, ETC.
- NBC’s Stephanie Gosk reports.

INSIDER TRADING: EX-GOLDMAN SACHS DIRECTOR CHARGED IN GALLEON INSIDE TRADE PROBE … SHOULD INSIDER TRADING BE LEGAL?

- John Tamny, RealClearMarkets and Forbes Opinions Editor
- Joe Tacopina, Criminal Defense Attorney

GUPTA CHARGES COULD BE AS BIG OR BIGGER THAN MADOFF?

- CNBC’s John Carney
- John Tamny, RealClearMarkets and Forbes Opinions Editor - DC/4001 Nebraska
- Joe Tacopina, Criminal Defense Attorney

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On Kudlow Report tonight at 7pm ET:

MARKETS

- Jeff Matthews, founder of the hedge fund Ram Partners LP; "Pilgrimage to Warren Buffett's Omaha" author
- Philip Silverman, Kingsview Management Managing Partner
- Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer

ARE UNIONS HOLDING STATES HOSTAGE?

- Gov. Sam Brownback (R-Kansas)

MIDDLE EAST IN TURMOIL … IS SAUDI ARABIA NEXT? IMPACT ON OIL PRICES?
- Karen Eliot House, WSJ Publisher
- Dan Senor, Council on Foreign Relations Sr. Fellow for Middle East Studies

BUDGET BATTLE: REPORT CLAIMS GOP SPENDING PLAN WOULD COST 700,000 JOBS

- Mark Zandi, Economy.com Chief Economist; McCain Campaign Economic Advisor; Author, "Financial Shock"
- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On Kudlow Report tonight at 7pm ET:

**CNBC’s Trish Regan will be hosting tonight.

MARKETS: WHICH WAY WILL THE BULL RUN?

- Joe Battipaglia, Stifel Nicolaus Market Strategist
- Michael Farr, Farr, Miller & Washington; CNBC Contributor
- Phillip Silverman, Kingsview Management Managing Partner

WILL INFLATION DERAIL THE ECONOMY?

- Peter Cohan, Peter Cohan & Associates Pres.; Professor at Babson School of Business; e-Stocks, Author
- Andre Julien, Senior Market Strategist at OpVest

BUDGET CUT STANDOFF IN WISCONSIN

- Zac Schultz reports from Madison.

UNREST IN THE MIDWEST - UNION RIGHTS SHOWDOWN

- Gov. Ed Rendell, Former DNC Chairman; Pennsylvania Governor (D-PA)- Democratic Wisconsin State Senator
- Dean Knudson, (R) Wisconsin State Representative

CRISIS IN THE MIDEAST

- NBC’s Richard Engel reports.

THE MIDEAST POWDER KEG … U.S. MILITARY INTERVENTION IN LIBYA?

- Gen. Barry McCaffrey, McCaffrey & Assocs; NBC News Military Analyst; Fmr. Gulf War Div. Commander; Fmr. Nat'l Secy Council Member
- Dan Goure, Lexington Institute; Vice President; fmr.Sr. Defense Analyst

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On Kudlow Report tonight at 7pm ET:

**CNBC’s Michelle Caruso-Cabrera will be hosting tonight.

MARKETS: THE FEAR TRADE...WHERE ARE THE SAFE HAVENS?

- Bob Gelfond, MQS Asset Management CEO
- Jim Iuorio, Options Action Contributor; Director, TJM Institutional Services
- Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer

OIL RALLIES TO $100
IS THE ECONOMY IN A STRONGER POSITION TO HANDLE RISING OIL PRICES?
DOES SAUDI ARABIA HAVE THE CAPACITY THEY CLAIM THEY DO?

- Dan Yergin, IHS Canbridge Energy Resources Chairman; CNBC Global Energy Expert; "The Prize" Author
- Peter Beutel, Cameron Hanover President
- Chris Edmonds, FIG Partners Managing Principal

PRO-UNION PROTESTS
- Zac Schultz reports from Madison, WI.

SHOULD UNIONS BE ABOLISHED? ARE UNIONS HURTING OUR ECONOMY? WHAT’S THE IMPACT ON ECONOMY IF WALKER SUCCEEDS?

- Mark Levine, Radio Host & Democratic Strategist
- Rep. John Nygren, (R) Wisconsin State Assembley

MOAMMAR THE MADMAN?
IS HE "CRAZY" ENOUGH TO SET THE OIL FIELDS ON FIRE?

- Hisham Melhem, Al Arabiya Washington Bureau Chief
- Ken Timmerman, Middle East Data Project President; "Countdown to Crisis: The Coming Nuclear Showdown with Iran" Author

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On Kudlow Report tonight at 7pm ET:

**CNBC’s Michelle Caruso-Cabrera will be hosting tonight & tomorrow night.

MARKETS

- Keith McCullough, Founder & CEO of Hedgeye Risk Management; CNBC Contributor
- Jack Bouroudjian, CEO of Index Futures Group; CNBC contributor
- Jim Glassman, "Safety Net" Author; George W. Bush Institute Executive Director

CRISIS IN THE MIDDLE EAST; LIBYA & KHADDAFY

- NBC’s Richard Engel reports.

OIL SPIKE: HOW HIGH & HOW LONG?

- John Kilduff, CNBC Contributor; Again Capital LLC Partner
- Dan Dicker, Independent Oil Trader, TheStreet.com Senior Contributor
- Robert Baer, former Middle East CIA field officer; TIME.com's intelligence columnist; author of See No Evil" & "The Devil We Know: Dealing with the New Iranian Superpower"

MORE MAYHEM IN MADISON

- Zac Schultz, WMTV Madison Reporter.

UNION BUDGET BATTLE

- Ben Manski, Liberty Tree Foundation Executive Director
- State Rep. Scott Suder, (R-WI) State Assembly Majority Leader

GOVERNMENT SHUTDOWN?

- Dan Mitchell, CATO Senior Fellow
- Keith Boykin, Former Clinton White House Aide; Editor of The Daily Voice online news site; CNBC contributor

Please join us at 7pm ET on CNBC.

Madison Madness

The Democratic/government-union days of rage in Madison, Wis., are a disgrace. Wisconsin congressman Paul Ryan calls it Cairo coming to Madison. But the protesters in Egypt were pro-democracy. The government-union protesters in Madison are anti-democracy; they are trying to prevent a vote in the legislature. In fact, Democratic legislators themselves are fleeing the state so as not to vote on Gov. Scott Walker’s budget cuts.

That’s not democracy.

The teachers’ union is going on strike in Milwaukee and elsewhere. They ought to be fired. Think Ronald Reagan PATCO in 1981. Think Calvin Coolidge police strike in 1919.

The teachers’ union on strike? Wisconsin parents should go on strike against the teachers’ union. A friend e-mailed me to say that the graduation rate in Milwaukee public schools is 46 percent. The graduation rate for African-Americans in Milwaukee public schools is 34 percent. Shouldn’t somebody be protesting that?

Governor Walker is facing a $3.6 billion budget deficit, and he wants state workers to pay one-half of their pension costs and 12.6 percent of their health benefits. Currently, most state employees pay nothing for their pensions and virtually nothing for their health insurance. That’s an outrage.

Nationwide, state and local government unions have a 45 percent total-compensation advantage over their private-sector counterpart. With high-pay compensation and virtually no benefits co-pay, the politically arrogant unions are bankrupting America — which by some estimates is suffering from $3 trillion in unfunded liabilities.

Exempting police, fire, and state troopers, Governor Walker would end collective bargaining over pensions and benefits for the rest. Collective bargaining for wages would still be permitted, but there would be no wage hikes above the CPI. Unions could still represent workers, but they could not force employees to pay dues. In exchange for this, Walker promises no furloughs for layoffs.

Indiana Gov. Mitch Daniels is also pushing a bill to limit the collective-bargaining rights of teachers for wages and wage-related benefits. Similar proposals are being discussed in Idaho and Tennessee. In Ohio, Gov. John Kasich wants to restrict union rights across-the-board for all state and local government workers. More generally, both Democratic and Republican governors across the country are taking on the extravagant pay of government unions.

Why? Because taxpayers won’t stand for it anymore.

In an interesting twist on this story, even private unions are revolting against government unions. Private unions pay taxes, too. And they don’t have near the total compensation of the public unions. It’s no wonder they’re fed up.

So, having lost badly in the last election, the government-union Democrats in Wisconsin have taken to the streets. This is a European-style revolt, like those seen in Greece, France, and elsewhere. So it becomes greater than just a fiscal issue. It is becoming a law-and-order issue.

President Obama, who keeps telling us he’s a budget cutter, has taken the side of the public unions. John Boehner correctly rapped Obama’s knuckles for this. If the state of Wisconsin voters elected a Chris Christie-type governor with a Republican legislature, then it is a local states’ rights issue.

But does President Obama even know that the scope of collective bargaining for federal employees is sharply limited? According to the Manhattan Institute, federal workers are forbidden to collectively bargain for wages or benefits. Instead, pay increases are determined annually through legislation.

Meanwhile, Gov. Scott Walker said it would be “wise” for President Obama to keep his attentions on Washington, not Wisconsin. “We’re focused on balancing our budget,” he said in a television interview. “It would be wise for the president and others in Washington to be focused on balancing their budget, which they’re a long ways from doing.”

Amen.

Obama should stay out. And Governor Walker should stand tall and stick to his principles. A nationwide taxpayer revolt against public unions can save the country. Otherwise, the spiraling out-of-control costs of state public-union entitlements will destroy the local fisc, just as surely as the unreformed federal entitlements of Social Security and health care are wrecking our national finances.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

THE MARKET

- Stephanie Link,TheStreet; Dir of Research/VP of Strategy
- Dan Genter, RNC Genter Capital Management President, CEO & Chief Investment Officer
- Larry Glazer, Co-Founder of Mayflower Advisors


INFLATION ALARM

- Joe LaVorgna, Deutsche Bank Chief U.S. Economist & CNBC Contributor
- Vince Reinhart, American Enterprise Institute resident scholar; former director of monetary affairs at the FOMC

TURMOIL IN THE MIDDLE EAST … BLOODBATH IN BAHRAIN; EGYPT SIGNS OFF ON IRANIAN WARSHIPS PASSING THROUGH SUEZ CANAL
- NBC’s Richard Engel reports.

WISCONSIN BUDGET BATTLE PROTESTS

- Zac Schultz, WMTV Madison Reporter joins us live from Madison, WI.

WISCONSIN: BATTLE BETWEEN TAXPAYERS & GOVERNMENT UNIONS - IT'S A STATE ENTITLEMENT ISSUE - PATCO THE TEACHERS UNION!

- Robert Reich, Fmr. Labor Secy; "Aftershock: The Next Economy & America's Future" author; CNBC Contributor
- State Rep. Scott Suder, (R-WI) State Assembly Majority Leader

IBM & THE WATSON COMPUTER: THE WAVE OF THE FUTURE; JOB KILLING COMPUTER?

- Katharine Frase, Vice President of Industry Solutions, IBM Research

FREE MARKET FRIDAY
a) BUDGET BATTLE: IS A GOVERNMENT SHUTDOWN LIKELY?
b) SHOULD UNIONS BE BUSTED?

- Dolly Lenz, Vice Chairman Prudential Douglas Elliman
- Dan Gerstein, Political Consultant Dan Gerstein Consulting
- Chystia Freeland, Thomson Reuters Global Editor at Large

Please join us at 7pm ET on CNBC.

The Madison Disgrace

The Democratic/government-union days of rage in Madison, Wis., are a disgrace. Paul Ryan calls it Cairo coming to Madison. But the protesters in Egypt were pro-Democracy. The government-union protesters in Madison are anti-democracy. In fact, Democratic legislators are fleeing the state so as not to vote on Gov. Scott Walker’s budget cuts.

The teacher’s union is going on strike in Milwaukee and elsewhere. They ought to be fired. Think Reagan PATCO in 1981. Think Calvin Coolidge police strike in 1919.

Governor Walker is facing a $3.6 billion budget deficit, and he wants state workers to pay one-half of their pension costs and 12.6 percent of their health benefits. Currently, most state employees pay nothing for their pensions and virtually nothing for their health insurance. That’s an outrage.

Nationwide, state and local government unions have a 45 percent total-compensation advantage over their private-sector counterpart. With high-pay compensation and virtually no benefits co-pay, the politically arrogant unions are bankrupting America -- which by some estimates is suffering from $3 trillion in unfunded liabilities.

Exempting police, fire, and state troopers, Governor Walker would end collective bargaining for the rest. Unions could still represent workers, but could not get pay increases above the CPI. Nor could they force employees to pay dues. And in exchange for this, Walker promises no furloughs for layoffs.

So, having lost badly in the last election, the government-union Democrats have taken to the streets. This is a European-style revolt, like those seen in Greece, France, and elsewhere. So it becomes greater than just a fiscal issue. It is becoming a law-and-order issue.

President Obama, who keeps telling us he’s a budget cutter, has taken the side of the public unions. John Boehner correctly rapped Obama’s knuckles for this. If the state of Wisconsin voters elected a Chris Christie-type governor with a Republican legislature, then it is a local states’ rights issue.

Obama should stay out. And Governor Walker should stand tall and stick to his principles. Otherwise, a nationwide revolt of state-government unions will destroy the country as well as its finances.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

MARKETS

- Keith McCullough, CEO of Hedgeye Risk Management
- Bob Froehlich, The Hartford, Sr. Managing Director
- Don Luskin, Trend Macro Chief Investment Officer


AN INFLATION TSUNAMI COMING?

- Brian Wesbury, First Trust Advisors Chief Economist
- Lee Munson, Portfolio Asset Management Chief Investment Officer

BRUTAL CRACKDOWN IN BAHRAIN

- NBC’s Richard Engel reports.

UNIONS UNDER FIRE…WISCONSIN PROTESTS OVER BUDGET BILL

- Howard Dean, Fmr. VT Governor & Presidential Candidate; "Howard Dean's Prescription for Real Health Care Reform" Author; CNBC Contributor
- State Rep. Robin Vos, (R-Wisc.) co-chair of the state's Joint Finance Cmte

DEFICIT PLAN DETAILS EMERGE: SO WHAT'S THE PLAN HATCHING?

-Senate Budget Committee members Rob Portman (R-OH) and Ron Wyden (D-OR) will join us.

Please join us at 7pm ET on CNBC.

The Potential Profits Squeeze

"Don’t fight the Fed” is an old stock market adage. Successful investors pay a lot of attention to it. It means that when the central bank is easy, it’s bullish for stocks. And when the bank turns tight, it’s bearish for stocks.

Obviously, the Bernanke Fed has been ultra-easy for a couple of years now: The bullish stock market has just doubled its value from the early March 2009 bottom.

However, another old stock market slogan is “follow profits.” Profits are the mother’s milk of stocks, and they have been doing very well over the past two-year market rally. So don’t fight profits, either.

But some new information raises a question mark about the longevity of rising profits. Namely, producer prices— which used to be called wholesale prices—are now rising much faster than consumer prices.

In other words, if the input costs for a company are rising more than the prices it gets at final sale, that’s gonna squeeze earnings. And that’s exactly what’s happening now, even though the ebullient stock market seems to be ignoring it.

The January report on producer prices showed a third-straight outsized increase, summing to 9.6 percent at an annual rate. Over the past 12 months, PPI is up 3.6 percent. Behind these big jumps is the import-price index, which just increased above 5 percent year-on-year for the second-straight month.

The unreliable dollar has something to do with it. As the Fed keeps printing new greenbacks, both real and nominal broad-dollar indexes measured by the Fed are showing nearly four-decade lows. And of course, commodity indexes have been exploding. You might say there’s too much money chasing too few goods and assets at home and around the world.

But on the potential profits squeeze, consumer prices through December (we get a new January CPI tomorrow) are rising at a 1.5 percent rate -- 2.1 percentage points less than the PPI. That erodes profit margins. This is a profits warning and a yellow flag for the stock market.

Incidentally, speaking of the CPI, there is an important consumer-goods component of the PPI. Overall consumer-goods prices are up 12.2 percent annually over the past three months and 4.7 percent over the past year. Even the core ex-food-and-energy part of consumer goods is rising 4.8 percent annually over the past three months.

So the combination of easy money, a cheap dollar, and rising commodity and import prices, along with the fact that wholesale prices are gaining much faster than consumer prices, should provide a sober reminder that this big stock market rally is not completely glitch free.

Finally, in the most recent Fed policy minutes released today, the central bank acknowledges a more optimistic economic-growth story. It has raised its 2011 forecast to a range of 3.4 to 3.9 percent, up from its earlier band of 3.0 to 3.6 percent. But it remains unconcerned about inflation. So as far as QE2 goes, expect the Fed to keep on pumping.

Which brings me back to that old adage, “don’t fight the Fed.” Sure, the Fed is your friend. That is, until it’s no longer your friend. There is such a thing as the law of unintended consequences.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

THE MARKETS

- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Jeff Kleintop, LPL Financial Chief Market Strategist



ARE YOU READY FOR INFLATION? CORE PRODUCER PRICES SPIKE

- David Gilmore, Foreign Exchange Analytics, Partner
- David Goldman, Fmr. head of fixed income research at Bank of America


IRANIAN WARSHIPS TO PASS THROUGH SUEZ CANAL?

- Dan Senor, Sr. Fellow for Middle East Studies; Council on Foreign Relations

IS A BUDGET DEAL POSSIBLE? IS OBAMA NEGIOTIATING FROM WEAKNESS, NOT STRENGTH? SHOULD GOP STRIKE WHILE THE IRONS HOT ON TAX REFORM, SPENDING CUTS, SOUND DOLLAR … PLUS.... STATE VS. UNIONS: SHOULD UNIONS BE GUTTED?

- Robert Reich, Fmr. Labor Secretary; "Aftershock: The Next Economy & America's Future" author; CNBC Contributor; Univ. of CA., Berkeley, Prof.
- Steve Moore, Wall Street Journal Editorial Board Sr. Economics Writer; "Return to Prosperity" co-author

ONE-ON-ONE WITH THOMAS SOWELL

- Thomas Sowell, Syndicated Columnist; Hoover Institute Senior Fellow

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

MARKETS

-Keith McCullough, Hedgeye Risk Management CEO
-Lee Munson, Portfolio Asset Management CIO
-David Goldman, former head of Fixed Income Research at Bank of America

GROWING GLOBAL INFLATION FEAR

-David Gilmore, partner at Foreign Exchange Analytics
-John Tamny, editor of RealClearMarkets and Forbes Opinions

WHAT'S IN THE BUDGET YOU DON'T KNOW ABOUT?

-Ryan Ellis, Tax Policy Director at Americans for Tax Reform

THE BATTLE OF THE BUDGET

-Sen. Tom Coburn (R-OK)
-Sen. Mark Warner (D-VA)

THE GERMANS ARE COMING! THE GERMANS ARE COMING!

-Peter Navarro,business professor at the University of California-Irvine
-David Goodfriend, former Clinton White House official

Please join us at 7pm ET on CNBC.

Spending Restraint, Part I: Lessons from Ronald Reagan and Bill Clinton

Take a couple minutes to watch Dan Mitchell's new mini-documentary released to coincide with President Obama's FY2012 proposal.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

THE MARKETS
-Ron Kruszewski, Stifel President & CEO
-Jack Ablin, Harris Private Bank chief investment officer
-Larry Glazer, Mayflower Advisors co-founder



OBAMA'S BUDGET PLAN
-Douglas Holtz-Eakin, former Congressional Budget Office director
-Howard Dean, former Vermont governor

ONE-ON-ONE WITH RON PAUL
Congressman Ron Paul (R-TX), winner of this weekend's CPAC presidential straw poll will join us.

MUBARAK'S BILLIONS...NEW INFO
CNBC's Scott Cohn reports.

RED CHINA RISING...CHINA SURPASSES JAPAN...IS THE U.S. NEXT?


Please join us at 7pm ET on CNBC.

Obama = Reagan?

A week after Ronald Reagan’s 100th birthday celebration, comparisons between presidents Obama and Reagan continue.

The conversation began when Obama praised Reagan in a USA Today op-ed. He commended Reagan’s leadership, his confidence in and optimism for America, and his great ability to communicate his vision for the country. Reaganites like myself appreciate these sentiments.

But so far, the differences between the two presidents are still huge.

Begin with the economy. Reagan and Obama both inherited deep and brutal recessions. But the first six recovery quarters look completely different for each president.

So far, real GDP has averaged only 3 percent annually for Obama. Employment as defined by nonfarm payrolls has increased by a paltry 121,000.

On the other hand, going back to Reagan’s first six recovery quarters, real GDP averaged 7.7 percent annually while nonfarm payrolls rose by 5.3 million.

No two situations are exactly alike. Reagan inherited massive double-digit inflation with 20 percent interest rates. Obama was left with a colossal financial meltdown. But Reagan’s economic vision put private-sector free-enterprise at the center. Obama has chosen a massive expansion of government power.

These are huge differences. One succeeded, while thus far the other has not.

While Obama’s first act was an $800 billion government-spending package, one of Reagan’s first decisions was a near $50 billion domestic-spending cut ($100 billion constant dollars today). Obama went for a nationalized health-care plan, energy cap-and-tax-and-trade, and pro-union card check. Reagan ended wage and price controls, deregulated all energy prices, terminated the Synthetic Fuels Corp., and fired the striking air-traffic controllers. Big differences.

Drawing from the work of Arthur Laffer and Robert Mundell, Reagan saw the economic-growth benefits of limited government, lower tax rates, and a dollar as good as gold. Gold prices plunged as Reagan and Paul Volcker worked to vanquish inflation. Ever-soaring inflation was the cruelest tax hike of all. But in the Reagan years the inflation rate dropped from near 13 percent to as low as 2 percent — a huge disinflation tax cut. Accompanied by lower marginal tax rates, the Reagan policies sparked a powerful recovery in business and jobs.

Reagan slashed tax rates across-the-board for individuals, investors, and businesses. At the margin, his reforms lowered the top personal rate from 70 percent to 28 percent. And he left a simple two-bracket tax code that cut thousands of pages of IRS rules and regulations.

And while the top individual tax rate was slashed under Reagan, individual income-tax revenues increased from roughly $300 billion to $450 billion. In other words, the Laffer curve worked. With surging economic growth, the incentives from lower tax rates actually raised tax revenues.

Mr. Obama, on the other hand, campaigned to raise tax rates on successful earners and investors. Along with the dozens of taxes legislated into Obamacare, these are all job stoppers.

Only after the 2010 election landslide did Mr. Obama finally agree to extend the 2003 Bush tax rates for a couple of years. But, he continues his pledge to hike those taxes again when the deal expires in 2012.

From his experience as a movie actor facing a 90 percent tax rate, Reagan always encouraged success. Everyone’s success. And he came to believe that if it pays more after tax to work and invest, then people will do so.

Of course, Reagan increased the defense budget to defeat the Soviets. But during the seven fat years of growth — to use the late Robert Bartley’s term — overall federal spending dropped from 23 percent of GDP to 21 percent. (Obama has taken the size of government to 25 percent of GDP.)

As for the budget deficit, Reagan left it around 3 percent of GDP — almost exactly where he inherited it.

Overall, Reagan’s policies created 21 million new jobs as real GDP averaged 3.5 percent annually during the seven fat years of recovery. The unemployment rate dropped to 5.3 percent from 10.7 percent. The stock market rose nearly 200 percent. And household net worth expanded by $8 trillion.

Quintessentially, Mr. Reagan was a private-sector, free-enterprise man. His policies of low tax rates, lighter regulation, domestic-spending limits, and low inflation rescued the country from the malaise of stagflation. Meanwhile, his military build-up, tough diplomacy, and “evil empire” battle cry defeated Soviet communism. Reagan was an optimist, but a tough-minded one. He believed in American exceptionalism. He also fervently believed in freedom.

Since last November’s Tea Party election, Obama has read about Reagan, talked about Reagan, and very cautiously moved economic policy in the direction of Reagan. I am open-minded. Let’s hope the current president stays on his new Reagan path.

But let’s never forget: Ronald Reagan saved the country 30 years ago. He also saved our future. Hopefully Mr. Obama will learn from that.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

THE MARKETS…EGYPT, STOCKS, COMMODITIES & MORE

- Jack Bouroudjian, IndexFuturesGroup.com CEO
- Helima Croft, Barclay's Geopolitical Analyst
- Brian Wesbury, First Trust Advisors Chief Economist
- Evan Newmark, Mean Street columnist Wall Street Journal

WHAT'S NEXT FOR OIL?

- John Kilduff, CNBC Contributor; Again Capital LLC Partner
- Kevin Kerr, Kerr Commodities Watch Editor; Kerr Trading International President
- CNBC’s Sharon Epperson

CHANGE IN CAIRO

- NBC’s Richard Engel reports.

EGYPT & AN UNCERTAIN ERA IN THE MIDDLE EAST

- Dan Senor, Sr. Fellow for Middle East Studies; Council on Foreign Relations
- Gen. Barry McCaffrey, NBC Military Analyst; 4-star General; U.S. Army (Ret.); McCaffrey Associates Pres.
- William Cohen, Fmr. Defense Secretary; The Cohen Group Chairman and Chief Executive Officer
- Dan Goure, Lexington Institute Vice President; Fmr. Pentagon Official

WHITE HOUSE FANNIE/FREDDIE PLAN

- CNBC’s Diana Olick reports.

GOV'T GETTING OUT OF FANNIE & FREDDIE?

- Ed Pinto, Mortgage Consultant; Fmr. Chief Credit Officer to Fannie Mae in the 1980's -
- John Taylor, President and CEO National Community Reinvestment Coalition

IS THE ECONOMY IMPROVING YET?

- Robert Reich, Fmr. Labor Secretary; "Aftershock" Author; CNBC Contributor; Univ of CA, Berkeley Prof.
- Steve Moore, WSJ Editorial Board Sr. Writer; "Return to Prosperity" co-author

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

EGYPTIAN UPRISING & BEYOND

- Gen. Barry McCaffrey, McCaffrey & Assoc; NBC News Military Analyst; Fmr. Gulf War Div. Commander; Fmr. Nat'l Security Council Member
- Steve Forbes, Forbes Chairman and CEO; Forbes Editor-in-Chief; Fmr. Presidential Candidate; "How Capitalism Will Save Us" Co-Author
- John Kilduff, CNBC Contributor; Again Capital LLC Partner
- Larry Korb, Ctr for Amer Progress Sr Fellow; Fmr. Asst. Defense Secy during Reagan Administration- Council on Foreign Relations member

MARKETS: EGYPT IMPACT ON STOCKS/ECONOMY/INFLATION

- Doug Kass, Seabreeze Partners Management Founder & President
- Barry Ritholtz, Fusion IQ CEO, Director of Equity Research
- Jim LaCamp. Macroportfolio Advisors Sr. VP, Portfolio Manager

MILITARY COUP FORCES OUT MUBARAK?

- NBC's Richard Engel reports.

EGYPTIAN UPRISING

- Amb. Daniel Kurtzer, Princeton Univ Professor in Middle Eastern Studies; Fmr. Amb to both Egypt & Israel; fmr. Amb to Egypt
- Genr'l Montgomergy Meigs, US ARMY (Ret.)
- Michael Rubin, co-author of a study of Arab democracy “Dissent and Reform in the Arab World”; AEI Middle East Expert Resident Scholar

FROM EGYPTIAN ECONOMY TO U.S. ECONOMY

- Mark Perry, University of Michigan-Flint economics & finance professor; AEI Visiting Scholar; "Carpe Diem" Blogger
- Steve Forbes, Forbes Chairman and CEO; Forbes Editor-in-Chief; Fmr. Presidential Candidate; "How Capitalism Will Save Us" Co-Author
- Jim LaCamp. Macroportfolio Advisors Sr. VP, Portfolio Manager

OBAMA'S BIG LIE ON TAXES; REPUBLICANS SPLINTERING ON SPENDING

- Keith Boykin, Fmr Clinton White House Aide; Editor of The Daily Voice online news site; CNBC contributor
- Steve Forbes, Forbes Chairman and CEO; Forbes Editor-in-Chief; Fmr. Presidential Candidate; "How Capitalism Will Save Us" Co-Author

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

THE MARKETS

- Joe Battipaglia, Stifel Nicolaus Market Strategist
- Vince Farrell, Soleil Securities Chief Investment Officer
- Mike Ozanian, Forbes Executive Editor


DEUTSCHE BOURSE TO BUY NYSE: U.S. FINANCIAL & ECONOMIC SECURITY AT STAKE? DOES U.S. LOSE CONTROL OF ITS FLAGSHIP EXCHANGE?

- Harvey Pitt, fmr. SEC Chairman; Kalorama Partners, CEO & Founder
- Rep. Ed Royce, (R) CA; Financial Services Cmte.

IS MEREDITH WHITNEY RIGHT? ARE STATES GOING BANKRUPT? MUNI-MARKET DEFAULTS COMING?

- Jim Lebenthal, Lebenthal & Co. co-founder
- Shah Gilani, Capital Wave Forecast Newsletter Author; MoneyMorning.com Contributing Editor -

HOUSE EPA HEARINGS
Representative Fred Upton (R - MI) joins us.

SHOULD FANNIE/FREDDIE BE COMPLETELY DONE AWAY WITH, TIME TO TRANSITION COMPLETELY TO FREE MARKET?

- Henry Cisneros, CityView Chairman & CEO; Former Mayor of San Antonio, TX; Former HUD Secretary
- Mark Calabria, Cato Institute Director of Financial Regulation Studies

Please join us at 7pm ET on CNBC.

A Thought on Obama = Reagan

In the battle over Ronald Reagan’s legacy, where media liberals and even the president are trying to suggest that Obama equals Reagan, here’s a quick thought:

Both Obama and Reagan inherited deep and brutal recessions. But the first six recovery quarters look much different for each president.

For President Obama, from the middle of 2009 through the end of 2010, real GDP growth has averaged only 3 percent annually and nonfarm payroll jobs a paltry 121,00.

On the other hand, in 1983-84 period, Reagan’s first six quarters of recovery saw real GDP averaging 7.7 percent annually with nonfarm payrolls rising 5.3 million.

So the numbers are different. And so are the philosophies. President Obama is strictly big-government spending, while President Reagan cut spending and tax rates to solve recession.

All of us Reaganites appreciate Obama’s kind words about the Gipper, but the differences between the two presidents are huge.

I’ll be writing more on this shortly.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

MARKETS: CAN ANYTHING STOP STOCKS?

- Don Luskin, Trend Macro Chief Investment Officer
- Daryl Jones, Hedgeye Managing Director
- Michael Farr, Farr, Miller & Washington president


WHAT DO BIG MORTGAGE MARKET CHANGES MEAN TO TEETERING HOUSING MARKET?

- CNBC’s Diana Olick reports.


- WOULD RADICAL CUT BACK OF GOVT'S MORTGATE ROLE BE GOOD OR BAD?
- SHOULD FANNIE/FREDDIE BE DOWNSIZED?
- DO HOMEOWNERS NEED TO PUT DOWN BIGGER DOWNPAYMENTS?

- John Taylor, President and CEO National Community Reinvestment Coalition
- Stephen Meister, founding partner of Meister, Seelig & Fein

REP. RON PAUL'S FIRST HEARING ON THE FED TOMORROW...IMPACT OF FED ON JOB CREATION & UNEMPLOYMENT RATE

- Rep. Ron Paul (R/TX) will join us in an exclusive interview.

DOES OBAMA REALLY WANT TO HELP BUSINESS? … OBAMA BUDGET A BAIT & SWITCH ON TAXES?

- Howard Dean, Fmr. Vermont Governor & Presidential Candidate; "Howard Dean's Prescription for Real Health Care Reform" Author; CNBC Contributor
- Steve Moore, Sr Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

THE MARKETS

- Jeff Kleintop, LPL Financial Chief Market Strategist
- James Altucher, Formula Capital Managing Director
- David Dietze, Point View Financial Services President & Chief Investment Strategist

HOW TO PROFIT FROM INFLATION

- Lee Munson, Portfolio Asset Management Chief Investment Officer
- Jim Iuorio, Options Action Contributor; Director, TJM Institutional Services

OBAMA TALKS TO THE CHAMBER OF COMMERCE… WHERE'S THE BEEF? … IS HE SERIOUS ABOUT HELPING BUSINESS OR IS IT JUST A P.R. CAMPAIGN?

- CNBC’s John Harwood reports from Washington.
- Jack Welch, Fmr. General Electric Chairman
- William George, Fmr. Medtronic Chairman & CEO; Harvard Business School Management Practice Prof.

GOVERNORS CHOP SPENDING … BUT IS ENOUGH BEING CUT?

- Gov. Bob McDonnell, (R-Virginia)
- Gov. Earl Ray Tomblin (D-West Virginia)

Please join us at 7pm ET on CNBC.

January's Unemployment Report: Snow Job

The January employment report was a complete snow job. Abominable winter blizzards across the country caused 886,000 workers to report "not at work due to bad weather," according to the Bureau of Labor Statistics. This is 600,000 more than the normal 300,000 not at work for the average January of the past decade.

So the bad weather has distorted the numbers. The actual 36,000 increase in nonfarm payrolls and the 50,000 gain in private payrolls really don't have a snowball's chance at being accurate. The 1 million people in January who wanted a job but didn't look for one because of "other" reasons hints again at the bad-weather distortion. So does the 4.9 million jump in the part-time workforce.

As for the 9 percent unemployment rate, it's not likely to last as more people are recorded reentering the labor force in the months ahead. The household employment survey (on which the unemployment rate is based) increased 117,000 in January, following a near 300,000 gain in December.

On the plus side (if anything can be believed in these numbers), average hourly earnings increased by four-tenths of 1 percent -- a much bigger gain than in recent months. Over the past year, wages are rising 1.9 percent.

But here's a key point: Manufacturing jobs in January rose by nearly 50,000. That's consistent with the blowout ISM manufacturing report for January published a few days ago. Manufacturing has been the biggest surprise in the recovery. Additionally, the ISM non-manufacturing services report was also gangbusters for January.

These reports are more accurate and more significant than today's jobs calculation. And if you piece them together with record-breaking profits, which are the mother's milk for stocks, business, and the whole economy, it's hard not to conclude that the pace of recovery is actually picking up steam -- despite the lackluster jobs performance.

The downside of the upside is mounting inflation pressure. Both ISM reports registered very strong prices paid. Those outsized price increases are picking up the huge commodity-price increases that Ben Bernanke continues to ignore.

Bond-market rates have moved up to 3.64 percent for the 10-year Treasury and 4.73 percent for the 30-year. Those rising yields are signaling inflationary growth. Along with soaring commodity prices, the abnormally steep Treasury yield curve is signaling the Fed to stop creating new dollars with its QE2 pump-priming.

Right now, stronger economic growth, higher profits, and rising inflation continue to help the stock market, which actually increased today after the weird jobs report. But the risk here is that reported inflation for the CPI may rise faster than anyone thinks. And that could take a bite out of stocks and the recovery.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

MARKETS & ECONOMY

- Keith McCullough, Founder & CEO of Hedgeye Risk Management; CNBC Contributor
- Todd Schoenberger, Managing Director LandColt Trading
- Thomas Belesis, John Thomas Financial Founder and CEO


EYE ON OIL: FUTURE PAIN AT THE PUMP?

- John Hofmeister, Citizens for Affordable Energy Founder & CEO; Fmr. President & CEO of U.S. Operations, Shell Oil

RONALD REAGAN’S 100TH ANNIVERSARY

- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author
- Judy Kudlow, under Reagan fmr. speakers bureau chief; fmr asst. press secy justice dept.; dir. of public affairs at Federal Trade Commission
- Craig Shirley, "Rendezvous with Destiny" Author; Shirley & Banister Public Affairs President

EGYPT: DEPARTURE DAY?

- NBC’s Richard Engel reports.

FREE MARKET FRIDAY

1) ARE WE UNDERESTIMATING THE STRENGTH OF THE RECOVERY?
2) DO AMERICANS CARE ABOUT EGYPT? SHOULD THEY?

- Deroy Murdock, Nationally Syndicated Columnist with Scripps Howard News Service
- Joe LaVorgna, Deutsche Bank Chief U.S. Economist
- Steven Gandel, Time Magazine

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

THE MARKETS

- Andre Julian, Senior Market Strategist at OpVest
- Vince Farrell, chief investment officer at Soleil
- Jim Iuorio, Director, TJM Institutional Services


FED UNDER FIRE ON INFLATION…

- Dan Greenhaus, Miller Tabak & Co Chief Economic Strategist
- Peter Navarro, "Seeds of Destruction" Author; University Of California - Irvine Business Professor

SCAM OF THE CENTURY
J.P. MORGAN AT 'CENTER' OF MADOFF FRAUD?

- NBC’s Jonathan Dienst reports.

VIOLENCE GROWS IN EGYPT

- NBC’s Richard Engel reports.

EYE ON OIL: IS IT IN AMERICA'S BEST INTEREST TO DEFEND THE SUEZ CANAL?
- Gen. Barry McCaffrey, NBC Military Analyst; U.S. Army (Ret.); McCaffrey Associates Pres.
- Larry Korb, Ctr for American Progress Senior Fellow; Fmr. Asst. Defense Secy during Reagan Admin; Council on Foreign Relations member
- Dan Goure, Lexington Institute Vice President; Fmr. Pentagon Official

GOLD GOING TO $2,000?

- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Zach Karabell, CNBC's Fast Money Contributor River Twice Research President

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

MARKETS

- Lee Munson, Portfolio Asset Management, COO
- Thomas Belesis, John Thomas Financial Founder and CEO
- Daryl Jones, Hedgeye Risk Management, managing director


IS BIG BEN A LIAR? IS GLOBAL INFLATION FAR HIGHER THAT STATS SHOW?

- Vincent Reinhart, American Enterprise Institute resident scholar; Fmr director of monetary affairs at the FOMC
- Brett Arends, Columnist, The Wall Street Journal

PROTESTS IN EGYPT TURN VIOLENT

- Bill Richardson, (D) Fmr. New Mexico Governor; Fmr. Ambassador to the U.N.; Fmr. Energy Secy
- Dan Senor, Sr. Fellow for Middle East Studies Council on Foreign Relations
- Gen. Wesley Clark, Ret. US Army General; NATO Supreme Allied Commander Europe (1997 - 2000)

FUTURE OF BAILOUTS, TOO BIG TO FAIL; HOW MUCH MONEY SPENT ON INVESTIGATIONS?

Neil Barofsky, TARP Special Inspector General

RX for Repeal...OBAMACARE VOTE

- CNBC's Hampton Pearson reports.

THE POLITICS OF OBAMACARE REPEAL -- GETTING DEMS ON THE RECORD FOR 2012

- Igor Volsky , Center for American Progress; "Howard Dean's Prescription for Real Health Care Reform" Co-Author
- Betsy McCaughey, Hudson Institute Health Policy Expert; Fmr. NY Lieutenant Governor (1995-1999)

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

MARKETS: BLOCKBUSTER STOCK RALLY; DOW RECLAIMS 12,000; S&P SPORTS 1,300; VIX DOWN MORE THAN 7%;





- Michael Cuggino, Permanent Portfolio Funds President & Portfolio Manager
- Harry Rady, CEO and portfolio manager at Rady Asset Management
- Steve Massocca, Wedbush Securities Managing Director

ECONOMY: INFLATION FEARS OVERBLOWN? STRONG ISM; WILL WE SEE 4% GROWTH? DOLLAR FALLING; GOLD UP

- Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer
- Michael Pento, Euro Pacific Capital Senior Economist; Euro Pacific Capital Vice President Managed Products

MUBARAK MAKES SPEECH TODAY, WON'T RUN IN NEXT ELECTION)
WILL MILITARY RUN COUNTRY NOW TILL SEPT? WHAT'S THIS MEAN FOR BROTHERHOOD? MESSAGE TO OTHER COUNTRIES? DOES THIS CHANGE PRICE OF FOOD, WHEAT, ETC?

- David Goldman, Senior Editor First Things Magazine; Fmr. Wall St. Economist: Bear Stearns & Credit Suisse
- Gen. Barry McCaffrey, U.S. Army (RET.); 4-star General; NBC News Military Analyst

MONSTER WINTER STORM

- Todd Santos, The Weather Channel
- Eric Fisher, The Weather Channel

EMERGING MARKETS: IS INFLATION VIRUS TAKING EMERGING BRICs OFF THE BUY LIST? IS IT TIME TO COME HOME TO AMERICAN STOCKS?

- David Goldman, Senior Editor First Things Magazine; Fmr. Wall St. Economist: Bear Stearns & Credit Suisse
- John Rutledge, CNBC Contributor; Fmr. Reagan Economic Advisor; Honorary Professor, Chinese Academy of Sciences
- Peter Morici, University of Maryland Robert H. Smith School of Business Prof; U.S. International Trade Commission Fmr. Chief Economist

Please join us at 7pm ET on CNBC.

Bernanke and Ethanol Sink Egypt

Decades of autocratic government and a lack of free elections are, of course, the main drivers of the political upheaval in Egypt. But did the sinking dollar and skyrocketing food prices trigger the massive unrest now occurring in Egypt — or the greater Arab world for that matter?

In addition to Egypt, the people have taken to the streets to varying degrees in Algeria, Jordan, Libya, Morocco, and Yemen. Local food riots have even broken out in rural China and other Asian locales.

While the mainstream media focuses on the political aspects of this turmoil, they are overlooking the impact of rising inflation, driven mainly by record food prices. For example, former Bush advisor Dan Senor notes that Egypt is the world’s largest wheat importer. Yet because of skyrocketing prices, Egyptian inflation is now over 10 percent, while some experts estimate that Egyptian food inflation has risen as much as 20 percent.

So I have to ask this tough question: Is Ben Bernanke’s ultra-easy QE2 money pump-priming partially to blame?

Commodities are priced in dollars, and the Federal Reserve has been overproducing dollars for more than two years. Consequently, emerging markets throughout the world — and the food sector in particular — are suffering from rising inflation.

The CRB food index is up an incredible 36 percent over the past year, including 8 percent year-to-date. Raw materials are up 23 percent in the past year. Inflation breakouts have occurred in China, among various Asian Tigers, and in India, Brazil, and other Latin American countries. Even Britain and Germany are registering higher inflation readings.

In dollar terms, the price of wheat has soared 114 percent over the past year. Corn has surged 88 percent. These are incredible numbers.

And let’s not forget that the world’s poor are the hardest hit by food-price inflation. They literally can’t afford to buy bread. It brings to mind the French Revolution in the 18th century. When you see this kind of mass protest in the streets, spreading from country to country, you see a pattern that cannot be explained by local conditions alone.

The dollar is the world’s reserve currency. And the rise of dollar food prices is a global phenomenon. It is a monetary phenomenon, as much as anything.

And that’s why one can argue that the worldwide revolt against soaring food prices is an unintended consequence of U.S. Fed policy. That policy is aimed at reigniting inflation here at home. But unwanted dollars circulating worldwide are hitting foreign inflation rates first. We may well catch this inflation virus before long.

To be fair, not all of the food inflation can be blamed on the Fed. A good part of this problem can also be placed at the doorstep of bipartisan U.S. policies to subsidize ethanol.

According to the Wall Street Journal, in 2001, only 7 percent of U.S. corn went to ethanol. By 2010, the ethanol share was 39 percent. So instead of growing wheat, our farmers are growing corn in order to cash in on ethanol subsidies. Egyptians who can’t afford to buy bread and have taken to the streets in protest might be very interested to know this.

Not even Al Gore still believes that ethanol provides any environmental benefits.

As the world watches events in Egypt play out, be mindful that if the U.S. fixed its mistaken monetary and energy policies, the forces of freedom and democratization would have an easier time of it in the rest of the world.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight at 7pm ET:

MARKETS

- Keith McCullough, Founder of Hedgeye Risk Management
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Phil Orlando, Federated Investors Chief Equity Market Strategist

COMMODITY RISE … EMERGING-WORLD TURMOIL … INFLATION: IS THE FED TO BLAME? CAN THEY FIX IT?

- Brett Arends, Columnist The Wall Street Journal
- David Riedel, Riedel Research Group President & Founder

EGYPT: WILL MUBARAK LAST? IMPACT ON REGION; HOW SHOULD OBAMA HANDLE?

- Lawrence Eagleburger, Fmr. Secretary of State; Baker, Donelson, Bearman & Caldwell Sr. Public Policy Advisor
- Gen. Montgomery Meigs, U.S. Army (Ret.)
- Daniel Kurtzer, Former U.S. ambassador to Egypt (1997-2001); Former U.S. ambassador to Israel (2001-2005)

WICKED WEATHER WATCH
- Todd Santos, The Weather Channel

FLORIDA FEDERAL JUDGE DEALS BLOW TO OBAMACARE

- CNBC’s Eamon Javers reports from the White House.

- Matt Miller, "Left, Right and Center" Host, Washington Post Online Edition Columnist
- Diana Furchtgott-Roth, Hudson Institute Director of the Center for Employment Policy

Please join us at 7pm ET on CNBC.

Food Riots: Is Bernanke Partially to Blame?

As we know, massive popular unrest has broken out against autocratic governments in North Africa and the Arab world. Egypt is the biggest story. But to varying degrees, the people have taken to the streets in Algeria, Jordan, Libya, Morocco, and Yemen.

But in addition to the apparent revolt against repressive governments, all the experts say the other main cause of unrest is record food prices. For example, former Bush advisor Dan Senor notes that Egypt is the world’s largest wheat importer. Because of skyrocketing prices, Egyptian inflation is now over 10 percent.

So I have to ask this tough question: Is Ben Bernanke’s ultra-easy QE2 money pump-priming partially to blame?

Commodities are priced in dollars, and the Fed has been overproducing dollars for more than two years. Consequently, emerging markets throughout the world — and the food sector in particular — are suffering from rising inflation.

The CRB food index is up an incredible 36 percent over the past year, including 8 percent year-to-date. Raw materials are up 23 percent over the past year. Inflation breakouts have occurred in China, various Asian Tigers, India, Brazil, and other Latin countries. Even Britain and Germany are registering higher inflation readings.

But food riots in the North Africa/Middle East area are bumping smack into long-time resentment over autocratic government.

If food is in fact the trigger for what may be a revolution in Egypt, then U.S. monetary policy has to shoulder at least some of the blame.

Ultimately, as Senor argues, a region-wide revolt against the autocrats may be healthy if it leads to greater democratization and liberalization. But the protests may spread to Saudi Arabia and Iran, with huge implications for global energy markets. And that’s where the hoped-for transition to political liberalization — with a potential backlash from radical Muslim groups — makes the story even more unpredictable.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: EGYPT & THE FEAR COMMODITY TRADES: GOLD & OIL … DOES BERNANKE SHARE BLAME FOR FOOD RIOTS? CRB FOOD INDEX UP 36% OVER LAST 52 WEEKS




- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Jim Iuorio, Options Action Contributor; Director, TJM Institutional Services
- John Kilduff, Again Capital; CNBC Contributor

OVER THROW OF EGYPTIAN GOVT? -- MIDEAST CONTAGION TO SAUDIS, ETC?

- Dan Senor, Sr. Fellow for Middle East Studies Council on Foreign Relations
- Dan Goure, Vice President (fmr.Sr. Defense Analyst) Lexington Institute

MARKETS … WE SAW THE PROMISED LAND AT S&P 1300 & DOW 12,000- BUT COULDN'T GET TO IT … WHAT NEXT?

- Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer
- Tommy Belesis, Founder and CEO John Thomas Financial
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager

FREE MARKET FRIDAY: JOHN PAULSEN, THE $5 BILLION MAN! HOW DID HE DO IT?

- Daymond John, FUBU Founder
- Evan Newmark, "Mean Street" columnist for the online Wall Street Journal

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: RISING PRICE PRESSURES; COMMODITIES CRACKUP; EARNINGS; S&P HITS 1300; DOW 12,000 - BRACE FOR CORRECTION OR BULL RUN?




- John Rutledge, Fmr. Reagan Economic Advisor; Chief Advisor to Governor of Haidian District in Beijing; Honorary Prof, Chinese Academy of Sciences
- David Dietze, Point View Financial Services; President and Chief Investment Strategist
- Todd Schoenberger, Managing Director LandColt Trading

SHOULD MICROSOFT BE BROKEN UP?

- CNBC’s Herb Greenberg
- Quentin Hardy, Forbes National Editor
- Roger Kay, Endpoint Technologies Associates President

GLOBAL DEBT THREAT … S&P downgrades Japanese debt; U.S. deficit outlook darkens; EU sovereign debt remains a threat

- David Goldman, Senior Editor First Things Magazine; Fmr. Wall St. Economist: Bear Stearns & Credit Suisse
- Michael Pento, Euro Pacific Capital Senior Economist; Euro Pacific Capital Vice President Managed Products

GLOBAL UNREST: ANTI-GOVERNMENT PROTESTS IN EGYPT
- Richard Engel, NBC News - Cairo, Egypt

CAN OBAMA DELIVER ON CORPORATE TAX REFORM?

- Scott Hodge, Tax Foundation President
- Ezra Klein, The Washington Post Writing Fellow

Please join us at 7pm ET on CNBC.

One-On-One with Gov. Chris Christie

Maverick New Jersey Governor Chris Christie gently whacks Obama on the budget, warns the GOP that they must deliver on spending, announces an across-the-board tax cut for New Jersey, and talks about the 2012 presidential race.

Christie: Showing Washington How to Get It Done

New Jersey Gov. Chris Christie expressed disappointment in President Obama’s failure to commit to aggressive budget cuts and entitlement reform in last night’s State of the Union speech. In a CNBC interview that will run tonight on my show, the governor contrasted his New Jersey efforts to slash spending and reform government-union pensions and health benefits with the president’s weak approach.

While Mr. Christie would not reveal any specifics, he said he will unveil across-the-board tax cuts for New Jersey in his budget to be released in a few weeks. That’s a surprise.

Right now, Christie is in a slugfest with Gov. Pat Quinn of Illinois about businesses migrating to the Garden State and leaving the Land of Lincoln. While Christie acknowledged that his state ranks near the bottom of a business tax-climate index published by the Tax Foundation, he told me that the difference between New Jersey and Illinois is that Illinois is on a path of higher taxes and New Jersey is on a path of lower taxes.

The governor also continued his mantra that he is not ready to be president. I asked him if he might be ready for a draft in 12 months. He said it’s not in his heart, and added that he made a pledge to the voters of New Jersey to stay and get the job done. I mentioned that he was using the state as a laboratory of conservative reform on taxes, deficits, and entitlements -- areas that exactly mirror the federal problem. And he agreed, telling me that he’s showing them how to get it done.

The governor recently had dinner with Mitt Romney, but he cautioned that the meeting should in no way be seen as a presidential commitment. He also cited recent visits with Haley Barbour, Tim Pawlenty, and Mitch Daniels, saying they are all good governors.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

DOW FLIRTING WITH 12,000

- Dan Genter, RNC Genter Capital Mgmt. CEO
- Stephanie Link, TheStreet.com, Director of Research
- Brett Arends, The Wall Street Journal Columnist

WASHINGTON TO WALL STREET
BUDGET BOMB! DEFICIT EXPECTED TO HIT $1.5 TRILLION -- DID OBAMA MISS THE BOAT?

- Keith Boykin, Former Clinton White House Aide; Editor of The Daily Voice online news site; CNBC contributor
- Andy Busch, BMO Capital Markets Global Currency and Public Policy Strategist

WICKED WEATHER WATCH

- Eric Fisher, Weather Channel

EXCLUSIVE ONE-ON-ONE INTERVIEW WITH NJ GOV. CHRIS CHRISTIE

WHAT'S NEXT FOR COMMODITIES?
- Jim Rogers, Rogers Holdings Chairman

Please join us at 7pm ET on CNBC.

Mr. ‘Investment’

In his State of the Union message tonight, President Obama is likely to call for some kind of corporate tax reform. But don’t look for him to be a budget-cutter.

As we know, in the name of “investment,” Mr. Obama is proposing spending increases for education, energy, and so-called infrastructure. By the way, in the last three years, education spending has gone up 209 percent, energy spending 150 percent, EPA spending 126 percent, transportation spending 71 percent, and science spending 47 percent. (Hat tip to Steve Moore of the WSJ.) Do we need more?

Centrist Democrats are not likely to agree with Obama’s new spending plans. Democratic Sen. Tom Carper of Delaware talked to me about the need for “a culture of thrift” in a recent CNBC interview. And Democratic Sen. Mark Warner of Virginia told me that he and Republican Sen. Saxby Chambliss of Georgia, along with more than 20 others, are going to co-sponsor the full spending and tax-reform plan presented by the president’s deficit commission headed by Erskine Bowles and Alan Simpson.

The best thing the president can do for competitiveness is to agree to Republican demands for much lower spending and a significant reduction in the corporate tax rate. And it will be interesting to see tonight if Obama continues to bash companies for their overseas revenues and profits — his usual mantra — or whether he accedes to territorial taxation and a repatriation tax holiday to bring foreign earnings back home where they can be invested and create jobs.

Tonight’s Republican response to Obama’s claims about the economy also will be interesting. Stocks have been surging and growth has been quickening. Fourth-quarter GDP to be reported Friday could come in around 4 percent. I would attribute this to a combination of strong private-sector corporate profits and ultra-easy Fed policy, although Obama surely will try to crow about the effectiveness of his spending-stimulus package.

Of course, the administration’s Achilles’ heel remains a sluggish employment recovery. Two years ago, when the $800 billion stimulus package was unveiled, the Obama economists predicted the unemployment rate would be 7 percent today. It’s actually 9.4 percent, even though there’s no question that the financial and economic crisis is long past.

In Rep. Paul Ryan’s Republican response tonight, and in other post-speech GOP congressional statements, it will be interesting to see the contrast between the economic plans of the two parties.

State of the Union...A Special Edition of The Kudlow Report Live from Capitol Hill

On CNBC's Kudlow Report tonight:

MARKETS

- Michael Farr, Farr, Miller & Washington/CNBC Contributor
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Keith McCullough, Founder & CEO of Hedgeye Risk Management

WILL OBAMA PROPOSE A CORPORATE TAX CUT?

- Gov. John Engler, Business Roundtable President

STATE OF SPENDING & TAXING

- Rep. Jeb Hensarling, (R) Texas; House Republican Conference Chair
- Rep. John Larson, (D) Connecticut; House Democratic Conference Chair

STATE OF THE UNION PREVIEW

- CNBC chief Washington correspondent John Harwood reports from Washington.

FEDERAL RESERVE FOCUS

Sen. Rand Paul, (R) Kentucky

MARKETS: REACT TO RAND PAUL ON FED

- Michael Farr, Farr, Miller & Washington/CNBC Contributor
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Keith McCullough, Founder & CEO of Hedgeye Risk Management

STATE OF SPENDING & TAXING

Sen. John Thune (R) South Dakota

Please join us at 7pm ET on CNBC.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: WHAT'S NEXT - DOW 11,000 OR DOW 13,000?

- Barry Ritholtz, Fusion IQ; CEO, Director of Equity Research
- Mike Holland, Chairman of Holland & Company
- Harry Rady, CEO Rady Asset Management


GLOBAL INFLATION FEAR RISING

- Peter Schiff, President, Euro Pacific Capital
- Dan Greenhaus, Miller Tabak & Co Chief Economic Strategist

STATE OF THE UNION PREVIEW
- CNBC’s Eamon Javers reports.

OBAMA VS. GOP ON SPENDING; OBAMA TURNS LEFT ON SPENDING - CATERING TO AFL-CIO & TEACHER UNIONS?

- Robert Reich, Fmr. Labor Secretary; "Aftershock: The Next Economy & America's Future" author; CNBC Contributor; Univ. of CA., Berkeley, Prof.
- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author

RUSSIAN TERROR ATTACK IMPLICATIONS

- Frank Gaffney, Center for Security Policy President; Former Asst Secy of Defense for International Security Policy Under Reagan
- Larry Korb, Ctr for American Progress Sr Fellow; Fmr. Asst. Defense Secy during Reagan Admin; Council on Foreign Relations member

Please join us at 7pm ET on CNBC.

GE’s Immelt on the Hot Seat

Can GE CEO Jeffrey Immelt talk President Obama into a major corporate tax cut? Immelt has been appointed to the new Council on Jobs and Competitiveness, which replaces the disbanded Paul Volcker Economic Recovery Advisory Board. Immelt was a member of that original board. Now he has a more elevated position in the Obama 2.0, allegedly pro-business, move-to-the-center Clintonesque White House.

Regarding the new President Obama, I am still trust but verify. But yes, of course, Jeff Immelt is a businessman through and through. He is a trustee of the Ronald Reagan Presidential Foundation board, while GE is a big sponsor of the Reagan Centennial Celebration. (Recall that the Gipper worked for GE as a spokesman and television host from 1954 through 1962.) He’s also a registered Republican who contributed to both Hillary Clinton and John McCain during the 2008 campaign. And last year, he harshly criticized Obama at a dinner in Italy, where he basically said: Obama doesn’t like business, and business doesn’t like Obama.

But what goes around comes around. Many business people wanted senior executives in the White House, and now they have two — with GE’s Immelt joining William Daley, the former banker and new chief of staff.

GE had a rough time of it during the Great Recession. But in recent quarters it has turned quite profitable; its stock just hit a 52-week high. In an op-ed for the Washington Post, Immelt set out his agenda for continued economic recovery. He would focus on manufacturing and exports, free trade, and innovation.

So where’s the corporate tax cut? Well, Immelt offered one short line about “a sound and competitive tax system . . .” No, not exactly a ringing call to action. But I believe he will, in fact, push for corporate tax reform.

There’s nothing more important than full-fledged corporate tax-rate reduction in order to maximize U.S. economic growth. At 35 percent, our highest-in-the-world corporate tax should be knocked all the way down towards 20 percent.

And businesses taxes should be made territorial, not worldwide, in order to stop the double-taxation of foreign earnings. Business revenues held overseas, now reported to be about $1 trillion, should be repatriated to the U.S. with a 5 percent tax holiday.

Businesses also should enjoy permanent 100 percent cash expensing for new investment in plant, equipment, and research. Studies have shown that this combination by far offers the biggest bang for the buck in terms of additional GDP and job-creation.

And yes, broaden the base with loophole closers. A lower tax rate and full expensing is much more important than all those K Street credits and deductions.

At the Republican House retreat in Baltimore a week ago, I argued for a two-track, pro-growth fiscal plan. Reform the business tax (Rep. Dave Camp) and bring federal spending as a share of the economy down to 20 percent from the current 25 percent (Rep. Paul Ryan). My friend and mentor Arthur Laffer, my co-panelist at the retreat, argued strongly that reduced spending is itself a tax cut. On this point, Laffer, Alan Reynolds, and Dick Armey have all recently cited the late Nobelist Milton Friedman, who held that government spending is the broadest tax on the overall economy.

And let’s add a rollback of Obamacare and a return to a reliable King Dollar (referenced to gold) as additional pro-growth measures. Finally, let’s enact drill, drill, drill. More energy across the board — “all of the above” — is another great job creator.

But my former boss Jeff Immelt (GE is selling NBC Universal to Comcast) can play a key role in a hugely important corporate tax cut. This will incentivize firms to stay at home instead of going overseas. It will be a huge job-creator, reducing unemployment and playing an important part in deficit reduction. According to the Congressional Budget Office, a 1 percentage point increase in GDP above the meager 2.5 percent baseline would lower the ten-year budget gap by nearly $3 trillion.

Growth solves a lot of problems. Can Mr. Immelt get the job done?

Send the Ultimate Message to China

A number of people, myself included, have looked to Ronald Reagan’s Cold War triumph over the Soviet Union as a possible solution to Red China’s rising arrogance.

Times are different today.

But Reagan argued forcefully that domestic economic growth is the best weapon against foreign threats.

During the Cold War ’80s, with the U.S. economy booming, we literally produced the goods that the Soviets did not. Today, while China needs to be challenged on its unfair trading practices, the U.S. also must adopt credible, pro-growth policies — including limited government, lower spending, fewer regulations, low tax rates, and a sound King Dollar.

That will send the ultimate message to China: Do not dare tread on the U.S.!