This evening at 7pm ET:
IS THE BEAR GOING TO TAKE OVER?
Panel:
*Dan Fitzpatrick publisher of The Stock Market Mentor
*Ron Kruszewski chairman and CEO of Stifel Nicolaus & Co
*Holly Liss, Citigroup Global Markets VP
*Bob Froehlich, senior managing director at Hartford Financial Services
DOLLAR & BOND REPORT
CNBC’s Rick Santelli will join us.
WAS THE GDP A FALSE RECOVERY SIGNAL?
Only half as good as it looks?
*Joe LaVorgna, chief US economist at Deutsche Bank
*Peter Morici, University of Maryland economist
ARE WE STEALING FROM TOMORROW TO HELP US TODAY?
*Jeremy Anwyl, Edmonds.com CEO
*Joe Weisenthal, editor of Clusterstock
Please join us. The Kudlow Report. 7pm ET. CNBC.
Friday, October 30, 2009
Thursday, October 29, 2009
GDP Up, Dollar Down, Troubles Remain
Today’s report of 3.5 percent GDP growth for the third quarter ending in September signals the end of the long recession. Although there are glitches in the GDP story -- including the one-time impact of Cash for Clunkers and the erratic bouncing around of disposable income from quarter to quarter (largely a result of government handouts), the fact remains that the economy is improving and that the big stock market rally is confirmed.
Wall Street economists like Joe LaVorgna and Michael Darda expect 4 percent growth in the quarters ahead. My own view is that this will be a business-led recovery, not only in terms of capital-spending investment, but also business-to-business transactions. Corporate cash flows are very strong and profits are improving. Economy-wide productivity is very high. And let’s not forget the Fed’s highly expansionary policies, with a zero target rate, a steep Treasury curve, and a growing balance sheet.
All of which raises an important policy point. As the economy recovers, where’s the exit strategy for all this stimulus? To protect the dollar, the Fed should be raising its target rate, or at the very least hint at raising it by changing the wording of next week’s policy statement.
Gold roared up today as the greenback fell again. Stocks are mounting a huge 200-point rally as of this writing. World markets are anticipating an inflationary recovery in the United States. And never-ending federal debt creation from more and more government spending adds to the greenback’s woes.
Restoration of King Dollar would be a tax cut for the whole economy. Think of it in oil terms: Crude oil jumped $2.40 today to $80 a barrel. If the dollar keeps sliding, oil is going to keep rising. And that’s a tax hike for the economy. It would block recovery. But if King Dollar were restored to its thrown, oil and other commodities would stay put, amounting to a de facto tax cut -- a spur to growth.
President Obama had a tepid response to today’s GDP report, as the administration contemplates more spending for a second stimulus package. That’s exactly what currency markets do not want to see.
Meanwhile, Treasury man Geithner talks about ending the too-big-to-fail policy for banks. But his idea sounds suspiciously like TARP in perpetuity -- where the government would take over failed banks, mostly at taxpayer expense, with some of it paid for by other bank insurance assessments. But TARP in perpetuity, stimulus in perpetuity, and easy-money in perpetuity is a fiscal/monetary overload that will reduce our potential to grow.
It is a great thing that the financial meltdown is over and the Great Recession has come to an end. But profligate policies will surely undermine the private free-enterprise economy’s valiant efforts to recover.
Wall Street economists like Joe LaVorgna and Michael Darda expect 4 percent growth in the quarters ahead. My own view is that this will be a business-led recovery, not only in terms of capital-spending investment, but also business-to-business transactions. Corporate cash flows are very strong and profits are improving. Economy-wide productivity is very high. And let’s not forget the Fed’s highly expansionary policies, with a zero target rate, a steep Treasury curve, and a growing balance sheet.
All of which raises an important policy point. As the economy recovers, where’s the exit strategy for all this stimulus? To protect the dollar, the Fed should be raising its target rate, or at the very least hint at raising it by changing the wording of next week’s policy statement.
Gold roared up today as the greenback fell again. Stocks are mounting a huge 200-point rally as of this writing. World markets are anticipating an inflationary recovery in the United States. And never-ending federal debt creation from more and more government spending adds to the greenback’s woes.
Restoration of King Dollar would be a tax cut for the whole economy. Think of it in oil terms: Crude oil jumped $2.40 today to $80 a barrel. If the dollar keeps sliding, oil is going to keep rising. And that’s a tax hike for the economy. It would block recovery. But if King Dollar were restored to its thrown, oil and other commodities would stay put, amounting to a de facto tax cut -- a spur to growth.
President Obama had a tepid response to today’s GDP report, as the administration contemplates more spending for a second stimulus package. That’s exactly what currency markets do not want to see.
Meanwhile, Treasury man Geithner talks about ending the too-big-to-fail policy for banks. But his idea sounds suspiciously like TARP in perpetuity -- where the government would take over failed banks, mostly at taxpayer expense, with some of it paid for by other bank insurance assessments. But TARP in perpetuity, stimulus in perpetuity, and easy-money in perpetuity is a fiscal/monetary overload that will reduce our potential to grow.
It is a great thing that the financial meltdown is over and the Great Recession has come to an end. But profligate policies will surely undermine the private free-enterprise economy’s valiant efforts to recover.
On Tonight's Kudlow Report
This evening at 7pm ET:
GDP, ECONOMY, MARKETS & MORE
Panel:
*Barron’s Andrew Bary
*CNBC senior economics reporter Steve Liesman
*The Atlantic’s Megan McCardle
*Clusterstock’s John Carney
DEBATE: THE FED & THE STOCK MARKET
Art Hogan, chief market analyst at Jefferies & Co will join Jeffrey Kleintop, chief market strategist for LPL Financial.
TIME TO DIAL BACK THE STIMULUS?
Rep. Brad Sherman (D-CA) will be aboard.
Please join us. The Kudlow Report. 7pm ET. CNBC.
GDP, ECONOMY, MARKETS & MORE
Panel:
*Barron’s Andrew Bary
*CNBC senior economics reporter Steve Liesman
*The Atlantic’s Megan McCardle
*Clusterstock’s John Carney
DEBATE: THE FED & THE STOCK MARKET
Art Hogan, chief market analyst at Jefferies & Co will join Jeffrey Kleintop, chief market strategist for LPL Financial.
TIME TO DIAL BACK THE STIMULUS?
Rep. Brad Sherman (D-CA) will be aboard.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Supply-Side Healthcare Solutions with Sen. Mitch McConnell
Last night I had the pleasure of speaking with distinguished Senate Minority Leader Mitch McConnell on whether this high-tax, high-premium, deficit-ridden government takeover of the U.S. economy can be stopped.
Wednesday, October 28, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:
SUPPLY-SIDE REVOLUTION
Economic freedom fighters unite....
Senate Minority Leader Mitch McConnell will join us.
PAY CZAR FEINBERG ON CAPITOL HILL
Nixonian wage controls?
Debate:
Mark Walsh, former Air America CEO
Jimmy Pethokoukis, Reuters
ARE WE AT RISK OF AN ECONOMIC RELAPSE?
Storm clouds out of Washington?
*Mort Zuckerman , publisher of the New York Daily News
*Niall Ferguson, Harvard University Professor
*Jim Paulsen, chief investment strategist at Wells Capital Management
THE BU$INESS OF BASEBALL
*Chris “Mad Dog” Russo will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
SUPPLY-SIDE REVOLUTION
Economic freedom fighters unite....
Senate Minority Leader Mitch McConnell will join us.
PAY CZAR FEINBERG ON CAPITOL HILL
Nixonian wage controls?
Debate:
Mark Walsh, former Air America CEO
Jimmy Pethokoukis, Reuters
ARE WE AT RISK OF AN ECONOMIC RELAPSE?
Storm clouds out of Washington?
*Mort Zuckerman , publisher of the New York Daily News
*Niall Ferguson, Harvard University Professor
*Jim Paulsen, chief investment strategist at Wells Capital Management
THE BU$INESS OF BASEBALL
*Chris “Mad Dog” Russo will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Economic Freedom Fighters, Unite
Jack Kemp would have fought back, and we must too.
It must be something in the water. The ruling Democrats know that their tax-hiking, re-regulating, and big-spending policies have failed to rejuvenate job-creation or reduce the unemployment rate. And yet they persist in trying more of the same.
A recent New York Times editorial acknowledges that the economy is weak, but it pleads for yet another federal stimulus package. The Times editors want another round of unemployment benefits (this would be the third) to subsidize non-work welfarism. They also want more federal spending on state Medicaid — an area that already has been showered with federal taxpayer money to no economic avail since it has nothing to do with economic growth.
Can’t we do better?
Or let’s take the case of Rep. Barney Frank, a smart guy. He told MSNBC that “The right wing took control of government and ruined it. They gave it a bad reputation. Now we are trying on every front to increase the role of government in the regulatory area.”
Ah! Re-regulation. What a great idea. As I recall, the Soviet Union and old Eastern Bloc tried heavy government control and regulation, and it didn’t work. The people rebelled. They wanted economic freedom; the right to keep their own money; the right to start their own businesses; and the right to climb the ladder of success in a free economy.
Now here’s a counter-thought. The Reagan free-market revolution, which included regulation lite, a sound dollar, and low tax rates, launched a three-decade-long boom. And yes, the Gipper’s policies were copied around the world. (What does Barney Frank know that the rest of the world doesn’t?) Even the communists in China have adopted deregulated free-market capitalism.
The battle between democratic entrepreneurial capitalism and heavy-handed statism has already been won by the economic freedom fighters around the globe. That’s one reason why the capitalist emerging economies in Asia, Eastern Europe, and many parts of Latin America (think Brazil) are challenging U.S. economic supremacy and the American dollar.
Prodded by the New York Times and other media organs, the Democrats in Congress are going in the wrong direction. They don’t seem to realize that growth and wealth come from individuals and human action, not from the heavy footprint of the state.
Here’s another example of drinking from the wrong water. Top administration economist Christina Romer delivered a very gloomy forecast to Congress last week. She said unemployment will remain at a “severely elevated level,” and that the U.S. jobs market will stay painfully weak next year. She was just being honest. Ms. Romer, who has written about the benefits of permanent tax cuts to stimulate GDP growth, might be sending a shot across the bow to her fellow Obamacons. She even said the Obama stimulus plan will contribute little to economic growth in 2010. From her own work, she knows that big-government spending and temporary tax credits have no economic-growth power.
So why not try something different? Unfashionable as it may be today, why not go back to the supply-side model of lower marginal tax rates for individuals and businesses, large and small? That’s the model my late dear friend Jack Kemp successfully espoused to President Reagan more than 30 year ago. It’s the incentive model of economic growth. At lower tax rates, where folks keep more of what they earn and invest, greater after-tax rewards spur greater work effort and investment risk. They also boost asset values. This is exactly what the economy needs: a rejuvenated dose of incentives — permanent incentives.
Think of this: At the same wage level from cost-conscious businesses, a 10 percent personal tax cut provides a handsome after-tax wage-increase incentive that will encourage individuals to go back to work — simply because work will pay more after-tax.
When I spoke last week at the launch of the Jack Kemp Foundation in Washington, D.C., I emphasized the supply-side model of a sound dollar, flat tax rates, free trade, limited government, and market-driven solutions for better schooling, more efficient health care, and the amelioration of poverty. Jack Kemp believed in these principles. He believed in growing the economic pie, not redistributing it. And he believed in growing it large. He would have hated today’s notion of a “new normal” of 2 percent growth and high unemployment. He would have argued for the need to give everyone greater economic-empowerment opportunities and incentives. And he would be as right today as he was in the mid-1970s when he began his crusade.
Kemp’s universal principles have stood the test of time. His was a genuine growth solution, one that is essential to America’s greatness, her boundless optimism, her prosperity, and her success. Today’s anti-growth economic policies would have driven him crazy. And he would have fought back.
That’s the message for economic freedom fighters everywhere: Unite, and throw off your chains. Especially here in America.
It must be something in the water. The ruling Democrats know that their tax-hiking, re-regulating, and big-spending policies have failed to rejuvenate job-creation or reduce the unemployment rate. And yet they persist in trying more of the same.
A recent New York Times editorial acknowledges that the economy is weak, but it pleads for yet another federal stimulus package. The Times editors want another round of unemployment benefits (this would be the third) to subsidize non-work welfarism. They also want more federal spending on state Medicaid — an area that already has been showered with federal taxpayer money to no economic avail since it has nothing to do with economic growth.
Can’t we do better?
Or let’s take the case of Rep. Barney Frank, a smart guy. He told MSNBC that “The right wing took control of government and ruined it. They gave it a bad reputation. Now we are trying on every front to increase the role of government in the regulatory area.”
Ah! Re-regulation. What a great idea. As I recall, the Soviet Union and old Eastern Bloc tried heavy government control and regulation, and it didn’t work. The people rebelled. They wanted economic freedom; the right to keep their own money; the right to start their own businesses; and the right to climb the ladder of success in a free economy.
Now here’s a counter-thought. The Reagan free-market revolution, which included regulation lite, a sound dollar, and low tax rates, launched a three-decade-long boom. And yes, the Gipper’s policies were copied around the world. (What does Barney Frank know that the rest of the world doesn’t?) Even the communists in China have adopted deregulated free-market capitalism.
The battle between democratic entrepreneurial capitalism and heavy-handed statism has already been won by the economic freedom fighters around the globe. That’s one reason why the capitalist emerging economies in Asia, Eastern Europe, and many parts of Latin America (think Brazil) are challenging U.S. economic supremacy and the American dollar.
Prodded by the New York Times and other media organs, the Democrats in Congress are going in the wrong direction. They don’t seem to realize that growth and wealth come from individuals and human action, not from the heavy footprint of the state.
Here’s another example of drinking from the wrong water. Top administration economist Christina Romer delivered a very gloomy forecast to Congress last week. She said unemployment will remain at a “severely elevated level,” and that the U.S. jobs market will stay painfully weak next year. She was just being honest. Ms. Romer, who has written about the benefits of permanent tax cuts to stimulate GDP growth, might be sending a shot across the bow to her fellow Obamacons. She even said the Obama stimulus plan will contribute little to economic growth in 2010. From her own work, she knows that big-government spending and temporary tax credits have no economic-growth power.
So why not try something different? Unfashionable as it may be today, why not go back to the supply-side model of lower marginal tax rates for individuals and businesses, large and small? That’s the model my late dear friend Jack Kemp successfully espoused to President Reagan more than 30 year ago. It’s the incentive model of economic growth. At lower tax rates, where folks keep more of what they earn and invest, greater after-tax rewards spur greater work effort and investment risk. They also boost asset values. This is exactly what the economy needs: a rejuvenated dose of incentives — permanent incentives.
Think of this: At the same wage level from cost-conscious businesses, a 10 percent personal tax cut provides a handsome after-tax wage-increase incentive that will encourage individuals to go back to work — simply because work will pay more after-tax.
When I spoke last week at the launch of the Jack Kemp Foundation in Washington, D.C., I emphasized the supply-side model of a sound dollar, flat tax rates, free trade, limited government, and market-driven solutions for better schooling, more efficient health care, and the amelioration of poverty. Jack Kemp believed in these principles. He believed in growing the economic pie, not redistributing it. And he believed in growing it large. He would have hated today’s notion of a “new normal” of 2 percent growth and high unemployment. He would have argued for the need to give everyone greater economic-empowerment opportunities and incentives. And he would be as right today as he was in the mid-1970s when he began his crusade.
Kemp’s universal principles have stood the test of time. His was a genuine growth solution, one that is essential to America’s greatness, her boundless optimism, her prosperity, and her success. Today’s anti-growth economic policies would have driven him crazy. And he would have fought back.
That’s the message for economic freedom fighters everywhere: Unite, and throw off your chains. Especially here in America.
Tuesday, October 27, 2009
Why Won't Chris Christie Come on Kudlow Report?
It's coming down to the wire in New Jersey for GOP gubernatorial candidate Chris Christie in his race to unseat the incumbent, Democratic Gov. John Corzine. We've invited Mr. Christie on the program several times to no avail. The offer remains on the table.
An Interview with Jon Kyl on the Back-from-the-Dead Public Option
Here’s my interview from last night with Arizona senator and Republican Whip Jon Kyl. Kyl, one of the soundest thinkers in the Senate, takes apart Harry Reid’s new-fangled government-insurance option.
The interview begins at the 3:18 mark.
The interview begins at the 3:18 mark.
David Goldman: The Dollar Is Toast And It Won't Help The Stock Market
Market commenter David Goldman was on the show last night, explaining the bubble that's formed in toxic, low-rated tranches of commercial real estate, as well as the rapid march by Asian nations to get out from under the dollar trap. Joining him were CNBC's Rick Santelli and Politico's Eamon Javers.
Monday, October 26, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:
GOVERNMENT TAKEOVER OF HEALTHCARE?
The latest on what could become the largest government takeover in U.S. history.
NBC News Kelly O'Donnell reports.
***We’ll also have an exclusive interview with Senator Jon Kyl (R-Ariz).
A LOOK AT THE BANKS & TOO BIG TOO FAIL
CNBC senior economics reporter Steve Liesman reports.
WHY IS GOLDMAN SACHS STILL A BANK?
CNBC On-Air editor Charlie Gasparino will join us.
THE DOLLAR, FED & THE MARKETS
Panel:
*CNBC’s Rick Santelli
*Politico’s Eamon Javers
*David Goldman
PICOWER: DEATH OF A MADOFF ASSOCIATE
CNBC’s Mary Thompson reports.
Please join us. The Kudlow Report. 7pm ET. CNBC.
GOVERNMENT TAKEOVER OF HEALTHCARE?
The latest on what could become the largest government takeover in U.S. history.
NBC News Kelly O'Donnell reports.
***We’ll also have an exclusive interview with Senator Jon Kyl (R-Ariz).
A LOOK AT THE BANKS & TOO BIG TOO FAIL
CNBC senior economics reporter Steve Liesman reports.
WHY IS GOLDMAN SACHS STILL A BANK?
CNBC On-Air editor Charlie Gasparino will join us.
THE DOLLAR, FED & THE MARKETS
Panel:
*CNBC’s Rick Santelli
*Politico’s Eamon Javers
*David Goldman
PICOWER: DEATH OF A MADOFF ASSOCIATE
CNBC’s Mary Thompson reports.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Hutchison Talks Healthcare Takeover
Is the government’s insurance plan back from the dead?
Here’s my interview with Kay Bailey Hutchison, Texas Republican Senator and gubernatorial candidate, on the government’s attempt to takeover the U.S. healthcare system.
The interview begins at the 3:04 mark.
Here’s my interview with Kay Bailey Hutchison, Texas Republican Senator and gubernatorial candidate, on the government’s attempt to takeover the U.S. healthcare system.
The interview begins at the 3:04 mark.
Why Not Cut Taxes and Spending?
Here’s a question: If unemployment is the problem, then why aren’t supply-side tax cuts, along with tougher government budgetary restraints, a possible solution?
Top Obama economic advisor Christy Romer delivered a very gloomy forecast to Congress late last week. She said that unemployment will remain at a “severely elevated level” and that the U.S. jobs market will stay painfully weak next year. She was just being honest. Romer even said the Obama stimulus plan will not contribute much to economic growth next year.
So the administration is searching for a jobs-recovery plan, just like the rest of the country. Meanwhile, big-government spending and temporary tax credits have not worked, by the administration’s own admission. That’s basically what Ms. Romer was saying.
So why not try something different? Why not go for lower tax rates across-the-board on individuals, businesses, and investors? Why not go for permanent tax cuts that will create new growth incentives? To paraphrase economist Art Laffer, if it pays more, after tax, to work, produce, and invest, folks will work, produce, and invest more. It’s worked in the past. And I believe it will work again.
Incidentally, this idea of cutting spending and cutting tax rates is attracting a lot of attention in many of the key state races right now — like the governor’s race in New Jersey, where unemployment is also hovering around 10 percent. The idea is also looming large in Virginia, as well as in some of the early skirmishing in California.
If it’s happening in the states, when will Washington finally get the message?
Top Obama economic advisor Christy Romer delivered a very gloomy forecast to Congress late last week. She said that unemployment will remain at a “severely elevated level” and that the U.S. jobs market will stay painfully weak next year. She was just being honest. Romer even said the Obama stimulus plan will not contribute much to economic growth next year.
So the administration is searching for a jobs-recovery plan, just like the rest of the country. Meanwhile, big-government spending and temporary tax credits have not worked, by the administration’s own admission. That’s basically what Ms. Romer was saying.
So why not try something different? Why not go for lower tax rates across-the-board on individuals, businesses, and investors? Why not go for permanent tax cuts that will create new growth incentives? To paraphrase economist Art Laffer, if it pays more, after tax, to work, produce, and invest, folks will work, produce, and invest more. It’s worked in the past. And I believe it will work again.
Incidentally, this idea of cutting spending and cutting tax rates is attracting a lot of attention in many of the key state races right now — like the governor’s race in New Jersey, where unemployment is also hovering around 10 percent. The idea is also looming large in Virginia, as well as in some of the early skirmishing in California.
If it’s happening in the states, when will Washington finally get the message?
Friday, October 23, 2009
Is Rick Perry a Texas Supply-Sider?
I posed this question to Texas Republican Governor Rick Perry on last night's show. Click on the video to hear what he had to say.
Thursday, October 22, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:
The Markets, The Dollar, and the Supply-Side Revolution
*Steve Odland from Office Depot
*Jerry Bowyer
*Michael Pento
*Brian Domitrovic
*Don Luskin
Supply-side Solutions will be discussed with Governor Rick Perry
CNBC's Mary Thompson will report on Executive Pay -- a debate with Jeff Sonnenfeld and Congressman Jeb Hensarling with follow.
CNBC's Matt Nesto will give an earnings report
The Fed and the Markets
*Ed Yardeni
*Michael Farr
Please join us. The Kudlow Report. 7pm ET. CNBC.
The Markets, The Dollar, and the Supply-Side Revolution
*Steve Odland from Office Depot
*Jerry Bowyer
*Michael Pento
*Brian Domitrovic
*Don Luskin
Supply-side Solutions will be discussed with Governor Rick Perry
CNBC's Mary Thompson will report on Executive Pay -- a debate with Jeff Sonnenfeld and Congressman Jeb Hensarling with follow.
CNBC's Matt Nesto will give an earnings report
The Fed and the Markets
*Ed Yardeni
*Michael Farr
Please join us. The Kudlow Report. 7pm ET. CNBC.
Kemp's Keys
I believe that free-market capitalism -- on the supply-side and along with King Dollar -- is the best path to prosperity. That’s the model my late dear friend Jack Kemp successfully espoused to President Reagan more than 30 years ago. It’s the incentive model of economic growth. It conquered the inflation of the Carter years, and launched a 20-year prosperity that saw the creation of 45 million new jobs and a twelve-fold stock market increase. It’s the model that expanded the investor class to 100 million strong through the Clinton 1990s.
I spoke this week at the launch of the Jack Kemp Foundation in Washington, and I emphasized this model along with the universal, timeless economic principles on which it is based. Today this model seems all but forgotten in the nation’s capital, but I firmly believe it is just what we need to reignite American economic growth and exceptionalism.
Here are the model’s critical components:
First, a sound dollar -- King Dollar.
Second, low and flat tax rates to incentivize positive economic behavior by making it pay more, after-tax, to work, invest, and take risks.
Third, free trade.
Fourth, limited government.
Fifth, market-driven solutions to ameliorate poverty and provide everyone with new opportunities to climb the ladder of success.
Jack Kemp believed in growing the economic pie, not redistributing it. And he believed in growing it large. He would have hated today’s notion of a “new normal” -- of 2 percent growth and high unemployment.
He also disagreed with raising top marginal tax rates, and he certainly would have opposed the extravagant spending-and-borrowing schemes that we’re saddled with today. We’ve clearly gone off the supply-side path -- off the winning path that Jack helped build.
Growth, empowerment, opportunity, and incentives -- those were Jack’s key words. Now, more than ever, these principles must be revived. They are essential to America’s greatness. To her boundless optimism. To her prosperity and success.
One-On-One with Larry Lindsey
Last night I had the pleasure of speaking with Larry Lindsey, the former director of the White House Economic Council, about the state of the supply-side revolution, as well as the steady decline of King Dollar.
Wednesday, October 21, 2009
Special Kudlow Report Tonight
SUMMIT TO RESCUE KING DOLLAR
Please join us live from Washington this evening as our panel debates the decline of the dollar.
Our guests include:
*Lawrence Lindsay, former director of the National Economic Council; President and Chief Executive Officer of The Lindsey Group
*Rep. Paul Ryan (R-WI)
*Sen. Jim DeMint (R-SC)
*Sen. Tom Coburn (R-OK)
*Sen. Judd Gregg (R-NH)
*Sen. Ron Wyden (D-OR)
*Henry Cisneros, former Housing and Urban Development Secretary
THE KUDLOW REPORT. 7PM ET. CNBC
An Interview with Governor Tim Pawlenty
Is the dollar's demise a sign of global declinism for America? Will this decline blow up the bull market economic recovery?
Joining me to discuss last night was distinguished Minnesota Republican Governor Tim Pawlenty. Mr. Pawlenty also happens to be a leading GOP presidential contender for 2012.
Joining me to discuss last night was distinguished Minnesota Republican Governor Tim Pawlenty. Mr. Pawlenty also happens to be a leading GOP presidential contender for 2012.
Tuesday, October 20, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:
WHAT WOULD PRESIDENT PAWLENTY DO ABOUT THE DOLLAR?
Plus a look at healthcare, deficits and more.
Joining us will be Republican Gov. Tim Pawlenty of Minnesota.
DOLLAR: POLITICAL RAMIFICATIONS
Guests:
*Peter Morici, economist and University of Maryland Business Professor
*Brian Carney, member of The Wall Street Journal's editorial board
*Robert Lenzner, National Editor of Forbes magazine
WILL CALIFORNIA BE SAVED BY A SUPPLY-SIDER?
California Insurance Commissioner & candidate for CA Governor Steve Poizner will be aboard.
THE STOCK MARKET
CNBC’s Michelle Caruso-Cabrera reports on CAT, YHOO and more.
FED AND THE MARKET
-Is this a liquidity driven market or is it profits/economic driven?
-Is the market rally being driven by easy money from the Fed?
*Jim Lacamp, portfolio manager and advisor at Macroportfolio Advisors
*Ned Riley, founder and CEO of Riley Asset Management
Please join us. The Kudlow Report. 7pm ET. CNBC.
WHAT WOULD PRESIDENT PAWLENTY DO ABOUT THE DOLLAR?
Plus a look at healthcare, deficits and more.
Joining us will be Republican Gov. Tim Pawlenty of Minnesota.
DOLLAR: POLITICAL RAMIFICATIONS
Guests:
*Peter Morici, economist and University of Maryland Business Professor
*Brian Carney, member of The Wall Street Journal's editorial board
*Robert Lenzner, National Editor of Forbes magazine
WILL CALIFORNIA BE SAVED BY A SUPPLY-SIDER?
California Insurance Commissioner & candidate for CA Governor Steve Poizner will be aboard.
THE STOCK MARKET
CNBC’s Michelle Caruso-Cabrera reports on CAT, YHOO and more.
FED AND THE MARKET
-Is this a liquidity driven market or is it profits/economic driven?
-Is the market rally being driven by easy money from the Fed?
*Jim Lacamp, portfolio manager and advisor at Macroportfolio Advisors
*Ned Riley, founder and CEO of Riley Asset Management
Please join us. The Kudlow Report. 7pm ET. CNBC.
Bernanke Is Playing with Fire
Fed chairman Ben Bernanke delivered a big speech yesterday and never mentioned the beleaguered dollar. Not once. This is just incredible — beyond the pale. And so for now, the story remains the same: Gold and commodities continue to boom, while the greenback plunges further.
Let’s be clear here: Mr. Bernanke is playing with fire. He is creating and fueling yet another speculative bubble that could spell doom for the bull-market recovery. This is why I’ve been calling it a storm cloud.
One last point here. The dollar’s demise is a sign of global declinism for America. This could be the worst part of the whole story. If the Obama administration wants to undermine American leadership and exceptionalism, and treat this country like all the other C-students around the world, they are sorely mistaken.
When the U.S. leads, the world prospers. When the U.S. declines — as in the 1970s — the world falls apart. The dollar therefore becomes a symbol, as well as a reality.
Let’s be clear here: Mr. Bernanke is playing with fire. He is creating and fueling yet another speculative bubble that could spell doom for the bull-market recovery. This is why I’ve been calling it a storm cloud.
One last point here. The dollar’s demise is a sign of global declinism for America. This could be the worst part of the whole story. If the Obama administration wants to undermine American leadership and exceptionalism, and treat this country like all the other C-students around the world, they are sorely mistaken.
When the U.S. leads, the world prospers. When the U.S. declines — as in the 1970s — the world falls apart. The dollar therefore becomes a symbol, as well as a reality.
Monday, October 19, 2009
Tonight on the Kudlow Report
This evening at 7pm ET:
EARNINGS CENTRAL
CNBC’s Matt Nesto has the latest.
APPLE AFTER THE BELL
CNBC’s Jim Goldman reports.
BULL VS. BEAR
*Joe Battipaglia, market strategist at Stifel Nicolaus
*Jim Paulsen, chief investment strategist at Wells Capital Management
DEMISE OF THE U.S. DOLLAR?
Guests:
*Barron's Andrew Bary
*David Malpass, economist & president of Encima Global LLC
*Steve Liesman, CNBC senior economics reporter
OIL PRICES
*John Kilduff, energy analyst at MF Global
*Addison Armstrong, analyst at Tradition Energy
INSIDER TRADING CRACKDOWN
CNBC’s Scott Cohn reports.
*Thomas Ajamie, Securites Law Attorney
*Tom Curran, white-collar defense lawyer
CHAMBER OF COMMERCE CLIMATE CHANGE HOAX
Tom Grieve, Politico Managing Editor will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
EARNINGS CENTRAL
CNBC’s Matt Nesto has the latest.
APPLE AFTER THE BELL
CNBC’s Jim Goldman reports.
BULL VS. BEAR
*Joe Battipaglia, market strategist at Stifel Nicolaus
*Jim Paulsen, chief investment strategist at Wells Capital Management
DEMISE OF THE U.S. DOLLAR?
Guests:
*Barron's Andrew Bary
*David Malpass, economist & president of Encima Global LLC
*Steve Liesman, CNBC senior economics reporter
OIL PRICES
*John Kilduff, energy analyst at MF Global
*Addison Armstrong, analyst at Tradition Energy
INSIDER TRADING CRACKDOWN
CNBC’s Scott Cohn reports.
*Thomas Ajamie, Securites Law Attorney
*Tom Curran, white-collar defense lawyer
CHAMBER OF COMMERCE CLIMATE CHANGE HOAX
Tom Grieve, Politico Managing Editor will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Friday, October 16, 2009
Tonight on the Kudlow Report
This evening at 7pm ET:
ARE STORM CLOUDS GATHERING?
A LOOK AT WHERE WE ARE ON ECONOMIC RECOVERY
Debate:
*John Lekas, Leader Capital CEO & Portfolio Mgr
*Carmen Reinhart, University of Maryland Professor of Economics
*Mark Perry, University of Michigan-Flint economics & finance professor; "Carpe Diem" Blogger
HEDGE FUND TITAN PERP WALK INSIDER TRADING CASE
CNBC’s Bertha Coombs reports.
CASH FOR OLDSTERS?
Is Obama trying to bribe the elderly into accepting Obama-care?
*Mike Flynn, Editor of Big Government; Reason Foundation Director of Government Affairs
*Matt Miller, Center for American Progress Senior Fellow
IS THE FHA GOING BROKE?
*John Carney, BusinessInsider.com Managing Editor
*Steven Malanga, Manhattan Institute Sr. Fellow; City Journal Contributing Editor
SAUDI ARABIA LOOKING FOR A HAND OUT?
*Jed Babbin, Human Events Editor/Humanevents.com Editor
*John Kilduff, CNBC Contributor; MF Global Sr. VP & Energy Analyst
Please join us. The Kudlow Report. 7pm ET. CNBC.
ARE STORM CLOUDS GATHERING?
A LOOK AT WHERE WE ARE ON ECONOMIC RECOVERY
Debate:
*John Lekas, Leader Capital CEO & Portfolio Mgr
*Carmen Reinhart, University of Maryland Professor of Economics
*Mark Perry, University of Michigan-Flint economics & finance professor; "Carpe Diem" Blogger
HEDGE FUND TITAN PERP WALK INSIDER TRADING CASE
CNBC’s Bertha Coombs reports.
CASH FOR OLDSTERS?
Is Obama trying to bribe the elderly into accepting Obama-care?
*Mike Flynn, Editor of Big Government; Reason Foundation Director of Government Affairs
*Matt Miller, Center for American Progress Senior Fellow
IS THE FHA GOING BROKE?
*John Carney, BusinessInsider.com Managing Editor
*Steven Malanga, Manhattan Institute Sr. Fellow; City Journal Contributing Editor
SAUDI ARABIA LOOKING FOR A HAND OUT?
*Jed Babbin, Human Events Editor/Humanevents.com Editor
*John Kilduff, CNBC Contributor; MF Global Sr. VP & Energy Analyst
Please join us. The Kudlow Report. 7pm ET. CNBC.
Thursday, October 15, 2009
Special Kudlow Report Tonight
This evening at 7pm ET:
IS CAPITALISM IN PERIL?
TALE OF TWO AMERICAS: WALL STREET VS. MAIN ST.
CNBC’s Tyler Mathisen will join us.
IS CAPITALISM IN PERIL?
A debate on the dropping dollar, bonus envy, overpaid executives, and the role of government.
Guests:
*Art Laffer, Fmr. Reagan Economic Advisor; Laffer Investments CIO
*Tony Fratto, Fmr. White House Deputy Press Secretary
*Keith Boykin, CNBC Contributor; Former Clinton White House Aide
*James Pethokoukis, Reuters Money & Politics Columnist
*Julian Epstein, LMG CEO; Fmr. Democratic Chief Counsel
*David Goodfriend, David Goodfriend; Fmr. Clinton W.H. Official; "Left Jab" Co-Host; Air America Co-Founder
LARRY SUMMERS ON COMPENSATION
CNBC chief Washington correspondent John Harwood has the story.
THE FUTURE OF CAPITALISM
Is it working for small business?
*Lynn Tilton, CEO Patriarch Partners
*Bill Dunkelberg, National Federation of Independent Businesses Chief Economist
Please join us. The Kudlow Report. 7pm ET. CNBC.
IS CAPITALISM IN PERIL?
TALE OF TWO AMERICAS: WALL STREET VS. MAIN ST.
CNBC’s Tyler Mathisen will join us.
IS CAPITALISM IN PERIL?
A debate on the dropping dollar, bonus envy, overpaid executives, and the role of government.
Guests:
*Art Laffer, Fmr. Reagan Economic Advisor; Laffer Investments CIO
*Tony Fratto, Fmr. White House Deputy Press Secretary
*Keith Boykin, CNBC Contributor; Former Clinton White House Aide
*James Pethokoukis, Reuters Money & Politics Columnist
*Julian Epstein, LMG CEO; Fmr. Democratic Chief Counsel
*David Goodfriend, David Goodfriend; Fmr. Clinton W.H. Official; "Left Jab" Co-Host; Air America Co-Founder
LARRY SUMMERS ON COMPENSATION
CNBC chief Washington correspondent John Harwood has the story.
THE FUTURE OF CAPITALISM
Is it working for small business?
*Lynn Tilton, CEO Patriarch Partners
*Bill Dunkelberg, National Federation of Independent Businesses Chief Economist
Please join us. The Kudlow Report. 7pm ET. CNBC.
The Value Added Tax: A Hidden New Tax to Finance Much Bigger Government
Here's a terrific new video from my friend Dan Mitchell over at the Center for Freedom and Prosperity Foundation explaining why a value-added tax would be a dangerous money machine for big government. Dan also discusses the evidence from Europe showing that VATs actually lead to higher income taxes.
Wednesday, October 14, 2009
Dow 10,000: Special Kudlow Report
Tonight at 7pm ET on CNBC:
A MARKET MILESTONE
Is the rally for real?
*Mario Gabelli, Gabelli Funds Chairman
*Bob Doll, BlackRock Vice Chair & Global CIO of Equities
*Ronald Kruszewski, Stifel, Nicolaus Chairman & CEO
*Allison Deans, Fmr. Chief Investment Officer for Neuberger Berman Private Asset Management
WHAT DOES THE DOLLAR MEAN FOR STOCKS?
CNBC’s Rick Santelli will weigh in with the market panel.
REMEMBERING LAZARD CEO BRUCE WASSERSTEIN
CNBC’s David Faber will join us.
EYE ON TECH
*Bob Froehlich, The Hartford Senior Managing Director
*CNBC’s Jim Goldman
CAN YOU BANK ON BANKS?
A look at bank bonuses & regulation
*Dick Bove, Financial Strategist Rochdale Securities
*Robert Albertson, Sandler O'Neill, Principal & Chief Strategist
DOW 10,000: THEN & NOW
CNBC’s Mary Thompson will take a look back.
Please join us this evening at 7pm ET on CNBC.
A MARKET MILESTONE
Is the rally for real?
*Mario Gabelli, Gabelli Funds Chairman
*Bob Doll, BlackRock Vice Chair & Global CIO of Equities
*Ronald Kruszewski, Stifel, Nicolaus Chairman & CEO
*Allison Deans, Fmr. Chief Investment Officer for Neuberger Berman Private Asset Management
WHAT DOES THE DOLLAR MEAN FOR STOCKS?
CNBC’s Rick Santelli will weigh in with the market panel.
REMEMBERING LAZARD CEO BRUCE WASSERSTEIN
CNBC’s David Faber will join us.
EYE ON TECH
*Bob Froehlich, The Hartford Senior Managing Director
*CNBC’s Jim Goldman
CAN YOU BANK ON BANKS?
A look at bank bonuses & regulation
*Dick Bove, Financial Strategist Rochdale Securities
*Robert Albertson, Sandler O'Neill, Principal & Chief Strategist
DOW 10,000: THEN & NOW
CNBC’s Mary Thompson will take a look back.
Please join us this evening at 7pm ET on CNBC.
Dow Hits 10,000 as Storm Clouds Gather
Dow Jones 10,000 arrived on Wall Street today for the first time in a year. It’s a milestone of sorts, and it certainly represents a vote for investor confidence in economic recovery. Blowout profit reports from Intel and JPMorgan helped fuel today’s 145 point gain. So did a retail sales report that excluding Cash for Clunkers was actually quite strong.
Profits are the mother’s milk of stocks, business, and the economy. And top-line sales revenues now appear to be bolstering the corporate cost-cutting effort. As long as these earnings keep coming in strong, stocks will keep rising. My hunch is that we’ll move back to pre-Lehman levels — to over 11,000 on the Dow and over 1,200 on the S&P. And backed by an easy-money Fed, the economy will probably grow in a mild V-shape of something like 3 to 4 percent for the next year or so.
But storm clouds are gathering. And a big one is the sinking dollar. No one in the Obama administration or at the Fed seems to care about it. In fact, they are probably applauding the lower dollar as a sort of 1970s way of boosting exports and the manufacturing heartland in the Midwest. But the falling dollar is bad for consumers. And it ultimately will cause higher inflation, as signaled by the rising gold price. There also are future tax hikes and the explosion of spending and debt. All of this is why it’s hard for me to be a long-term bull.
The great market boom of 1982 to 2000 was basically characterized by low marginal tax rates and King Dollar. Unfortunately, the 21st century has seen a weak dollar and more recently rising tax rates that are coming due in 2011 (if not sooner). In other words, the prosperity-inducing Mundell-Laffer supply-side model is being reversed.
As Art Laffer put it to me, we are stealing demand and production from the future. So even as we get a V-shaped recovery now and into next year, 2011 may pay the piper for both low growth and higher inflation.
Stocks could have another four to six months to rally. And that’s great for increasing the wealth of the investor class, and maybe even enhancing the animal spirits a bit. But the policy mix is wrong. Health-care entitlements and taxes punctuate the wrong-way policy mix. And what’s left to be seen is whether the Republicans can successfully challenge the Democrats with a true supply-side economic-growth and job-creating platform.
Profits are the mother’s milk of stocks, business, and the economy. And top-line sales revenues now appear to be bolstering the corporate cost-cutting effort. As long as these earnings keep coming in strong, stocks will keep rising. My hunch is that we’ll move back to pre-Lehman levels — to over 11,000 on the Dow and over 1,200 on the S&P. And backed by an easy-money Fed, the economy will probably grow in a mild V-shape of something like 3 to 4 percent for the next year or so.
But storm clouds are gathering. And a big one is the sinking dollar. No one in the Obama administration or at the Fed seems to care about it. In fact, they are probably applauding the lower dollar as a sort of 1970s way of boosting exports and the manufacturing heartland in the Midwest. But the falling dollar is bad for consumers. And it ultimately will cause higher inflation, as signaled by the rising gold price. There also are future tax hikes and the explosion of spending and debt. All of this is why it’s hard for me to be a long-term bull.
The great market boom of 1982 to 2000 was basically characterized by low marginal tax rates and King Dollar. Unfortunately, the 21st century has seen a weak dollar and more recently rising tax rates that are coming due in 2011 (if not sooner). In other words, the prosperity-inducing Mundell-Laffer supply-side model is being reversed.
As Art Laffer put it to me, we are stealing demand and production from the future. So even as we get a V-shaped recovery now and into next year, 2011 may pay the piper for both low growth and higher inflation.
Stocks could have another four to six months to rally. And that’s great for increasing the wealth of the investor class, and maybe even enhancing the animal spirits a bit. But the policy mix is wrong. Health-care entitlements and taxes punctuate the wrong-way policy mix. And what’s left to be seen is whether the Republicans can successfully challenge the Democrats with a true supply-side economic-growth and job-creating platform.
The Dollar Decline Must End
You know I’ve been crusading to save the greenback and restore King Dollar. But new entitlements that open the door to a government takeover of the health-care sector are no way to do it. Not surprisingly, as the Baucus Bill made it out of the Finance Committee yesterday, the dollar fell once again and gold jumped (closing at $1,064). Not good. Smells like the 1970s.
Just look at two ominous headlines in the news: First is the global shift out of the dollar and into commodities. Second is the dollar losing its reserve status to the yen and the euro.
In the second quarter ending in June, central banks around the world invested 63 percent of their new cash reserves into euro and yen, and put only 37 percent into dollars. Over the past six months, the dollar has lost 15 percent while gold has climbed nearly $150. If this continues, spiking inflation and interest rates will choke off the bull market in stocks and do serious damage to the economy. It could happen fast.
How to solve this problem? In supply-side terms, cut tax rates for new growth incentives. Meanwhile, the Fed must drain cash to remove dollars from the financial system and the Treasury must simultaneously buy dollars in the foreign-exchange markets.
And Washington must stop its explosive spending and borrowing. Some statutory — or even constitutional — limits should be set.
That the dollar is the world’s reserve currency is a tremendous asset for the United States. We must stop the fall of the dollar now. It’s a self-inflicted wound that will do great damage to American leadership and prestige globally, and to the economy here at home.
Just look at two ominous headlines in the news: First is the global shift out of the dollar and into commodities. Second is the dollar losing its reserve status to the yen and the euro.
In the second quarter ending in June, central banks around the world invested 63 percent of their new cash reserves into euro and yen, and put only 37 percent into dollars. Over the past six months, the dollar has lost 15 percent while gold has climbed nearly $150. If this continues, spiking inflation and interest rates will choke off the bull market in stocks and do serious damage to the economy. It could happen fast.
How to solve this problem? In supply-side terms, cut tax rates for new growth incentives. Meanwhile, the Fed must drain cash to remove dollars from the financial system and the Treasury must simultaneously buy dollars in the foreign-exchange markets.
And Washington must stop its explosive spending and borrowing. Some statutory — or even constitutional — limits should be set.
That the dollar is the world’s reserve currency is a tremendous asset for the United States. We must stop the fall of the dollar now. It’s a self-inflicted wound that will do great damage to American leadership and prestige globally, and to the economy here at home.
An Interview with Sen. John Thune
Last night distinguished South Dakota Sen. John Thune, chairman of the Senate Republican Policy Committee, joined me to discuss the $829 billion Baucus bill just passed by the Senate Finance Committee, as well as the need for a clear TARP exit strategy. He's got the story right on both.
The interview begins at the 3:50 mark.
The interview begins at the 3:50 mark.
Tuesday, October 13, 2009
Tonight on The Kudlow Report
This evening at 7pm ET:
HEALTHCARE ON THE HILL
CNBC chief Washington correspondent John Harwood reports from Washington.
AN INTERVIEW WITH SEN. JOHN THUNE
A Look at Healthcare, the Dollar & TARP
Sen. John Thune (R-SD) will be aboard.
INTEL AFTER THE BELL
CNBC’s Jim Goldman will speak with Intel’s CFO.
EARNINGS CENTRAL
CNBC’s Matt Nesto reports.
IS THE DOLLAR AN OBSTACLE TO THE STOCK MARKET?
Currency vigilantes instead of bond vigilantes?
*Brian Wesbury, First Trust Advisors Chief Economist
*Niall Ferguson, Harvard University professor, "Colossus" Author
*Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
NO OVERSEAS TAXATION
Michael Klayko, Brocade Communications Systems CEO will join us.
Plus...a look at Bernie Madoff’s prison brawl and Disney's retail makeover with Steve Jobs.
Please join us. The Kudlow Report. 7pm ET. CNBC.
HEALTHCARE ON THE HILL
CNBC chief Washington correspondent John Harwood reports from Washington.
AN INTERVIEW WITH SEN. JOHN THUNE
A Look at Healthcare, the Dollar & TARP
Sen. John Thune (R-SD) will be aboard.
INTEL AFTER THE BELL
CNBC’s Jim Goldman will speak with Intel’s CFO.
EARNINGS CENTRAL
CNBC’s Matt Nesto reports.
IS THE DOLLAR AN OBSTACLE TO THE STOCK MARKET?
Currency vigilantes instead of bond vigilantes?
*Brian Wesbury, First Trust Advisors Chief Economist
*Niall Ferguson, Harvard University professor, "Colossus" Author
*Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
NO OVERSEAS TAXATION
Michael Klayko, Brocade Communications Systems CEO will join us.
Plus...a look at Bernie Madoff’s prison brawl and Disney's retail makeover with Steve Jobs.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Friday, October 09, 2009
Save the Greenback, Mr. President
We know that gold is soaring. And we know the dollar is slumping. But, did you know that year-to-date, while the S&P 500 is up 18 percent—a great showing no doubt—gold is up even more. The precious metal is up 21 percent. In other words, measured in true, gold-backed purchasing power, stocks have really done nothing this year. Zip. It is most disappointing.
I try to be optimistic about better earnings, a stock market rally and economic recovery. And I’m sticking to my guns. But what we’re seeing right now is pretty darn close to what we witnessed in the 1970s—the rise in gold and inflation really cuts into the stock market.
So what’s the way out?
Well for starters, we need a stable dollar to stop inflationary pressures. And we also need lower tax rates to spur the economy, help it grow, and reduce unemployment. I’ve been calling this the Mundell-Laffer supply-side solution, after Nobel Prize winning economist Robert Mundell and my mentor, former Reagan advisor Arthur Laffer. It was put to work with great success nearly thirty years ago to stop stagflation. It also launched a twenty year bull market recovery.
Put simply, the Mundell-Laffer model exercises monetary restraint to save the dollar—and low marginal tax rates for economic growth incentives that benefit investors, risk takers, small businesses and workers. Right now, for therapy, the Fed should begin moving excess cash from the economy and they should raise their target rate. Take a page from the Reserve Bank of Australia’s playbook and move rates higher.
In addition, the Treasury ought to get out there and buy these unwanted dollars in the marketplace. Just go out there and bid for them. And they need to stop printing so much debt from Congress. All this massive spending and borrowing is killing us. We need to be slashing tax rates on large and small businesses. There’s just no better place to begin job creation. And leave the Bush tax cuts in place for heaven’s sake.
This supply-side shock therapy would save the dollar. And it would put real long-term torque into the recovery.
We’re supposed to be in an era of post-partisanship. So in this spirit, I’d like to respectfully ask President Obama and his economic team to give this plan a try. It worked for JFK. It also worked for Bill Clinton and Ronald Reagan. It can work for you as well.
The time has come to save the greenback and grow the economy sir.
I try to be optimistic about better earnings, a stock market rally and economic recovery. And I’m sticking to my guns. But what we’re seeing right now is pretty darn close to what we witnessed in the 1970s—the rise in gold and inflation really cuts into the stock market.
So what’s the way out?
Well for starters, we need a stable dollar to stop inflationary pressures. And we also need lower tax rates to spur the economy, help it grow, and reduce unemployment. I’ve been calling this the Mundell-Laffer supply-side solution, after Nobel Prize winning economist Robert Mundell and my mentor, former Reagan advisor Arthur Laffer. It was put to work with great success nearly thirty years ago to stop stagflation. It also launched a twenty year bull market recovery.
Put simply, the Mundell-Laffer model exercises monetary restraint to save the dollar—and low marginal tax rates for economic growth incentives that benefit investors, risk takers, small businesses and workers. Right now, for therapy, the Fed should begin moving excess cash from the economy and they should raise their target rate. Take a page from the Reserve Bank of Australia’s playbook and move rates higher.
In addition, the Treasury ought to get out there and buy these unwanted dollars in the marketplace. Just go out there and bid for them. And they need to stop printing so much debt from Congress. All this massive spending and borrowing is killing us. We need to be slashing tax rates on large and small businesses. There’s just no better place to begin job creation. And leave the Bush tax cuts in place for heaven’s sake.
This supply-side shock therapy would save the dollar. And it would put real long-term torque into the recovery.
We’re supposed to be in an era of post-partisanship. So in this spirit, I’d like to respectfully ask President Obama and his economic team to give this plan a try. It worked for JFK. It also worked for Bill Clinton and Ronald Reagan. It can work for you as well.
The time has come to save the greenback and grow the economy sir.
Tonight on The Kudlow Report
This evening at 7pm ET:
OBAMA WINS THE NOBEL PEACE PRIZE...
Andrew Breitbart will offer his perspective.
IS A SECOND STIMULUS PACKAGE IN THE WORKS?
On to debate will be former Clinton Labor Secretary Robert Reich and Reuters' Jimmy Pethokoukis.
TIM GEITHNER & A TUMBLING KING DOLLAR
The Wall Street Journal's Steve Moore will join us.
IS THE FHA CLOSE TO BROKE?
Joining us to discuss will be Clusterstock's John Carney.
Plus a debate over the true cost of Obamacare...
Please join us. The Kudlow Report. 7pm ET. CNBC.
OBAMA WINS THE NOBEL PEACE PRIZE...
Andrew Breitbart will offer his perspective.
IS A SECOND STIMULUS PACKAGE IN THE WORKS?
On to debate will be former Clinton Labor Secretary Robert Reich and Reuters' Jimmy Pethokoukis.
TIM GEITHNER & A TUMBLING KING DOLLAR
The Wall Street Journal's Steve Moore will join us.
IS THE FHA CLOSE TO BROKE?
Joining us to discuss will be Clusterstock's John Carney.
Plus a debate over the true cost of Obamacare...
Please join us. The Kudlow Report. 7pm ET. CNBC.
Thursday, October 08, 2009
Controlling Leviathan: The Battle for Limited Government
Here's a terrific video from my friend Dan Mitchell explaining why the main fiscal threat we face is excessive government spending. Speaking at the Steamboat Institute conference, Dan makes an impassioned case for limited government and individual freedom. Definitely worth watching.
(Click here if you'd like to watch the Q&A session featuring commentary about the financial crisis, Keynesianism, stimulus, tax competition and U.S. competitiveness.)
(Click here if you'd like to watch the Q&A session featuring commentary about the financial crisis, Keynesianism, stimulus, tax competition and U.S. competitiveness.)
On Tonight's Kudlow Report
This evening at 7pm ET:
EARNINGS CENTRAL
Today’s highlights & a look ahead
CNBC’s Matt Nesto reports.
STOCK MARKET
An eye on stocks, gold's surge, dollar weakness & more.
Panel:
* David Lamere, CEO BNY Mellon Wealth Management
* Peter Sorrentino, Huntington Real Strategies Fund
* Zachary Karabell, CNBC Contributor; River Twice Research President
HEALTHCARE UPDATE FROM THE HILL
CNBC chief Washington correspondent John Harwood reports.
AN INTERVIEW WITH SEN. EVAN BAYH
Spotlight on spending, healthcare & taxes
Indian Republican Sen. Evan Bayh will join us.
RETAIL SALES
CNBC’s Bertha Coombs reports.
*Dana Telsey, Telsey Advisory Group Chief Research Officer
*KellyAnne Conway, Polling Company President; Republican Pollster
HOUSE GOP LEADERSHIP JOBS LETTER TO OBAMA
The Wall Street Journal’s Steve Moore will be aboard.
Please join us. The Kudlow Report. 7pm ET. CNBC.
EARNINGS CENTRAL
Today’s highlights & a look ahead
CNBC’s Matt Nesto reports.
STOCK MARKET
An eye on stocks, gold's surge, dollar weakness & more.
Panel:
* David Lamere, CEO BNY Mellon Wealth Management
* Peter Sorrentino, Huntington Real Strategies Fund
* Zachary Karabell, CNBC Contributor; River Twice Research President
HEALTHCARE UPDATE FROM THE HILL
CNBC chief Washington correspondent John Harwood reports.
AN INTERVIEW WITH SEN. EVAN BAYH
Spotlight on spending, healthcare & taxes
Indian Republican Sen. Evan Bayh will join us.
RETAIL SALES
CNBC’s Bertha Coombs reports.
*Dana Telsey, Telsey Advisory Group Chief Research Officer
*KellyAnne Conway, Polling Company President; Republican Pollster
HOUSE GOP LEADERSHIP JOBS LETTER TO OBAMA
The Wall Street Journal’s Steve Moore will be aboard.
Please join us. The Kudlow Report. 7pm ET. CNBC.
The Fight for Arlen Specter's Seat
A big fight is brewing in the Keystone State over Sen. Arlen Specter's Senate seat. The two men hoping to replace Specter - Rep. Joe Sestak (D.,Penn) and former Republican Congressman Pat Toomey - duked it out on last night's show.
Here's the tape.
Here's the tape.
Doug Kass: Kudlow Report Recap
Here's the video of last night's "Road to Recovery" debate with Seabreeze's Dougie Kass and Jim Paulsen of Wells Capital Management. We covered a lot of ground. Great debate.
Make sure to check out my amazing media rock star pal's recap of the discussion below the video.
With My Fav'rite Host
10/8/2009 7:37 AM EDT
I was back with my fav'rite host, Sir Larry Kudlow, on Wednesday night. By my record, I have now been on CNBC's "The Kudlow Report" (or the old "Kudlow and Company") on nearly 50 occasions. While Larry and I typically don't agree on the political issues or even on economic forecasts, I admire him greatly on a number of levels. He is a dear friend, and our volleys are always fun and stimulating. Last night was no exception!
This time we were joined by the eclectic, personable and overall nice guy Jim Paulsen, who is the chief investment strategist at Wells Capital Management. Stated simply, Jim is among the best strategists around. I admire his practical approach and the rigor of his analysis. Importantly, he has a great sense of humor, and is a terrific communicator and worthy opponent in debate.
My points were:
Alcoa: The Alcoa (AA) release last night was not an important positive tell. My view expressed last night was that the Alcoa earnings give little clarity as to whether there will be meaningful top-line growth in American industry over the next several quarters.
The media rhetoric on the AA quarter has gotten hyperbolic. This is a company that has had nine consecutive sales declines -- and this year's (year-over-year) drop was more than 30%! Aluminum is a cyclical business, and the company only beat the consensus sales forecast of $4.55 billion by $75 million -- basically a rounding error. The company has $1 billion of cash and is being weighed down by $10.5 billion in debt! Moreover, the quarter benefited from several nonrecurring gains: a tax credit and a gain from asset sale. As well, cost-cutting of 20,000 employees aided results.
So, when observers grow excited because Alcoa earned a few pennies against the expectation of a modest loss. it has to be put into perspective. The average price of aluminum rose by 24% in the quarter, but Alcoa's revenue rose modestly on a sequential basis. Indeed, Aloca's actual unit shipments dropped by 4.5%!
To summarize, with the exception of China, most of the company's markets remain very depressed, and cost-cutting caused the small earnings beat. Revenue was $75 million above consensus -- less than 2% -- even in the face of a 24% sequential rise in aluminum prices. It was a quarter full of sound and fury signifying nothing ... except to the media.
Cost-cutting has its downside: The consumer remains the Achilles' heel of the economy, and I question the ability of the domestic economy to have a self-sustaining recovery because of my expectation of an elevated level of joblessness and continued wage deflation.
Wall Street is a long way from Main Street: All day long I meet with companies, talk with companies and make channel checks. The weakness I see on Main Street was demonstrated in several anecdotes I made last night. A friend owns a restaurant in Westchester County. His business is off 25% to 30% from Labor Day (far worse than seasonal). His Coca-Cola representative said orders dropped dramatically in same timeframe (September) -- again, far worse than seasonal. Same for his meat guy ... business slipped badly.
A week ago I visited one of the largest independent distributors of dental products -- business had weakened in the last five weeks. On Tuesday and Wednesday I spoke to four dentists -- each had previously said business had stabilized in separate conversations over the summer. All four now say business has suddenly turned negative.
Maybe Westchester county is in dire straits (it's not!), maybe my pal's restaurant has grown unpopular in the last few weeks (it hasn't!), maybe no one has cavities because they stopped drinking Coca-Cola (!!) and maybe meat sales for restaurants are poor because everyone is eating chicken or pasta ... or maybe all of this is a sign of eroding economic conditions that are being ignored by investors in the face of the strength in the stock market's price momentum supplied by a huge surge in liquidity as central bankers put a curse on cash!
On gold and inflation: I remarked that the reflation experiment has its limitations. There is not an unlimited supply or credit, nor is there an unlimited supply of trust. Interest rates and inflation are inevitably moving higher. I just don't know when!
Mounting due bills: The due bills of higher marginal taxes and inflation pose a unique and historically unprecedented headwind to growth.
What replaces real estate in driving the U.S. economy?: I don't see a driver to replace the strength in residential and nonresidential real estate of the 2002-06 period.
What to buy?: Stick with large multinationals that will benefit from a lower U.S. dollar. Companies like Pepsi (PEP) and Procter & Gamble (PG) generate large amounts of free cash flow, are self-financing and have dominant product market shares.
Jim Paulsen believes corporate cost-cutting is a huge asset and will be a driver to earnings growth in the quarters ahead. The just-completed third quarter will be the first in which we test-drive his theory. He sees overwhelming evidence of momentum in the economic recovery. He cited the ISM strength as an example, and he rejected my concerns regarding decelerating growth in durable goods, housing sales and a still-weak jobs market. Jim sees price stability over the short term and a big market move before my "due bills" are delivered. He favors the emerging markets over the U.S. stock market.
Make sure to check out my amazing media rock star pal's recap of the discussion below the video.
With My Fav'rite Host
10/8/2009 7:37 AM EDT
I was back with my fav'rite host, Sir Larry Kudlow, on Wednesday night. By my record, I have now been on CNBC's "The Kudlow Report" (or the old "Kudlow and Company") on nearly 50 occasions. While Larry and I typically don't agree on the political issues or even on economic forecasts, I admire him greatly on a number of levels. He is a dear friend, and our volleys are always fun and stimulating. Last night was no exception!
This time we were joined by the eclectic, personable and overall nice guy Jim Paulsen, who is the chief investment strategist at Wells Capital Management. Stated simply, Jim is among the best strategists around. I admire his practical approach and the rigor of his analysis. Importantly, he has a great sense of humor, and is a terrific communicator and worthy opponent in debate.
My points were:
Alcoa: The Alcoa (AA) release last night was not an important positive tell. My view expressed last night was that the Alcoa earnings give little clarity as to whether there will be meaningful top-line growth in American industry over the next several quarters.
The media rhetoric on the AA quarter has gotten hyperbolic. This is a company that has had nine consecutive sales declines -- and this year's (year-over-year) drop was more than 30%! Aluminum is a cyclical business, and the company only beat the consensus sales forecast of $4.55 billion by $75 million -- basically a rounding error. The company has $1 billion of cash and is being weighed down by $10.5 billion in debt! Moreover, the quarter benefited from several nonrecurring gains: a tax credit and a gain from asset sale. As well, cost-cutting of 20,000 employees aided results.
So, when observers grow excited because Alcoa earned a few pennies against the expectation of a modest loss. it has to be put into perspective. The average price of aluminum rose by 24% in the quarter, but Alcoa's revenue rose modestly on a sequential basis. Indeed, Aloca's actual unit shipments dropped by 4.5%!
To summarize, with the exception of China, most of the company's markets remain very depressed, and cost-cutting caused the small earnings beat. Revenue was $75 million above consensus -- less than 2% -- even in the face of a 24% sequential rise in aluminum prices. It was a quarter full of sound and fury signifying nothing ... except to the media.
Cost-cutting has its downside: The consumer remains the Achilles' heel of the economy, and I question the ability of the domestic economy to have a self-sustaining recovery because of my expectation of an elevated level of joblessness and continued wage deflation.
Wall Street is a long way from Main Street: All day long I meet with companies, talk with companies and make channel checks. The weakness I see on Main Street was demonstrated in several anecdotes I made last night. A friend owns a restaurant in Westchester County. His business is off 25% to 30% from Labor Day (far worse than seasonal). His Coca-Cola representative said orders dropped dramatically in same timeframe (September) -- again, far worse than seasonal. Same for his meat guy ... business slipped badly.
A week ago I visited one of the largest independent distributors of dental products -- business had weakened in the last five weeks. On Tuesday and Wednesday I spoke to four dentists -- each had previously said business had stabilized in separate conversations over the summer. All four now say business has suddenly turned negative.
Maybe Westchester county is in dire straits (it's not!), maybe my pal's restaurant has grown unpopular in the last few weeks (it hasn't!), maybe no one has cavities because they stopped drinking Coca-Cola (!!) and maybe meat sales for restaurants are poor because everyone is eating chicken or pasta ... or maybe all of this is a sign of eroding economic conditions that are being ignored by investors in the face of the strength in the stock market's price momentum supplied by a huge surge in liquidity as central bankers put a curse on cash!
On gold and inflation: I remarked that the reflation experiment has its limitations. There is not an unlimited supply or credit, nor is there an unlimited supply of trust. Interest rates and inflation are inevitably moving higher. I just don't know when!
Mounting due bills: The due bills of higher marginal taxes and inflation pose a unique and historically unprecedented headwind to growth.
What replaces real estate in driving the U.S. economy?: I don't see a driver to replace the strength in residential and nonresidential real estate of the 2002-06 period.
What to buy?: Stick with large multinationals that will benefit from a lower U.S. dollar. Companies like Pepsi (PEP) and Procter & Gamble (PG) generate large amounts of free cash flow, are self-financing and have dominant product market shares.
Jim Paulsen believes corporate cost-cutting is a huge asset and will be a driver to earnings growth in the quarters ahead. The just-completed third quarter will be the first in which we test-drive his theory. He sees overwhelming evidence of momentum in the economic recovery. He cited the ISM strength as an example, and he rejected my concerns regarding decelerating growth in durable goods, housing sales and a still-weak jobs market. Jim sees price stability over the short term and a big market move before my "due bills" are delivered. He favors the emerging markets over the U.S. stock market.
Wednesday, October 07, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:
KING DOLLAR IN DANGER...
Debate: inflation vs. deflation
*Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer
*Michael Mussa, Senior Fellow, Institute for International Economics; Former IMF Chief Economist
HOW TO PLAY GOLD’S SURGE
Joining us with his insight will be Frank Holmes, U.S. Global Investors CEO & CIO.
EARNINGS CENTRAL
Is Alcoa’s positive report a harbinger of Q3 earnings?
CNBC’s Bertha Coombs reports.
"ROAD TO RECOVERY"
Will profits help drive recovery?
*Doug Kass, Seabreeze Partners Management Inc.
*James Paulsen, Wells Capital Management Chief Investment Strategist
CBO SCORES BAUCUS BILL
CNBC’s Hampton Pearson reports from Washington.
MONEY POLITICS: FIGHT FOR PENNSYLVANIA SENATE SEAT
*Rep. Joe Sestak (D-PA)
*Former. Rep. Pat Toomey (R-PA)
Please join us. The Kudlow Report. 7pm ET. CNBC.
KING DOLLAR IN DANGER...
Debate: inflation vs. deflation
*Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer
*Michael Mussa, Senior Fellow, Institute for International Economics; Former IMF Chief Economist
HOW TO PLAY GOLD’S SURGE
Joining us with his insight will be Frank Holmes, U.S. Global Investors CEO & CIO.
EARNINGS CENTRAL
Is Alcoa’s positive report a harbinger of Q3 earnings?
CNBC’s Bertha Coombs reports.
"ROAD TO RECOVERY"
Will profits help drive recovery?
*Doug Kass, Seabreeze Partners Management Inc.
*James Paulsen, Wells Capital Management Chief Investment Strategist
CBO SCORES BAUCUS BILL
CNBC’s Hampton Pearson reports from Washington.
MONEY POLITICS: FIGHT FOR PENNSYLVANIA SENATE SEAT
*Rep. Joe Sestak (D-PA)
*Former. Rep. Pat Toomey (R-PA)
Please join us. The Kudlow Report. 7pm ET. CNBC.
The Mundell-Laffer Solution
Team Obama is in economic trouble on two fronts right now: The dollar could be headed toward its demise while the jobs and unemployment numbers have gotten worse. (The unemployment rate is up to 9.8 percent as of the September report released last week.) And there’s a simple policy mix the White House could adopt to fix this. It could enact the Mundell-Laffer supply-side approach of a steady King Dollar for price stability and low marginal tax rates to spur jobs and economic growth.
Columbia professor and Nobel Prize winner Robert Mundell and Reagan advisor Arthur Laffer put this formula to work nearly 30 years ago, and it launched a massive low-inflation, bull-market prosperity. Of course, I am a supply-side fossil. I am a dinosaur and a relic of the past. But I still believe this approach could work again, even if it’s not going to happen.
The dollar has been falling on and off for nearly ten years, and it’s in big trouble right now. The commodity inflation, housing bubble, and oil shock of recent years all can be traced to dollar weakness and excess money-creation by the Fed. A weak dollar helped destroy the Bush Boom and create the Great Recession. But now people are talking about ending the dollar’s reserve-currency status.
According to London’s Independent, the Arab oil producers in the Gulf are planning with China, Russia, Japan, and France to end dollar transactions for oil and move instead to a basket of currencies that might include the Japanese yen, the Chinese yuan, and the euro, along with gold and some kind of regional Gulf-state currency.
I say, where there’s smoke there’s fire. The dollar-demise story just won’t go away, and it’s clear now that China and others have lost confidence in the greenback. For the U.S., this is mostly a self-inflicted wound. And the Treasury and the Fed are in denial about it. The gold price has jumped all the way to $1,050, while the dollar index has fallen again. Without question, the U.S. is creating too many dollars through the Fed, and fiscal disarray continues to threaten more of the same.
And here’s a real conflict brewing in the financial markets: The Fed is fighting deflation with a near-zero interest-rate target, while gold, the dollar, and commodity markets are signaling that inflation is the real problem. Somebody is going to be very right here, and somebody is going to be very wrong. I’m betting on the markets being right.
So I have a thought, at least for the short run: The Fed should follow Australia, the first G-20 country to raise its target interest rate. The Aussies lifted their rate a quarter point to 3.25 percent. Right now the U.S. Fed should lift its target rate by 25 basis points. The fed funds target is currently 15 basis points, so this move would make it 40 basis points. It would be a dollar-protection signal; a price-stability signal. At the least, it would be a beginning. Next, the Treasury should buy some dollars in the open market to back up the Fed.
And as the White House considers a second stimulus package, here’s another thought: Go for growth. Reduce tax rates to provide growth incentives (something Team Obama has avoided like the plague). Cut the top corporate tax rate from 35 to 25 percent, and accompany that with a small-business tax cut from 35 to 25 percent. And leave the Bush tax cuts alone. Don’t let them expire in 2011. That’s cap-gains, dividends, and the top personal rate.
Yes, this is a supply-side solution: Reducing tax rates will ignite growth incentives.
And by applying it, Team Obama would be borrowing from George W. Bush, Bill Clinton, Ronald Reagan, and John F. Kennedy. (And Calvin Coolidge and Andrew Mellon, too.) Forget about Keynesian spending multipliers, which Harvard’s Robert Barrow writes are less than one. Forget about class warfare. Forget about income redistribution. Go for growth.
Again, I know I’m a supply-side fossil and a relic of the past. But the Mundell-Laffer policy plan -- which has worked historically for Republicans and Democrats -- could truly save the nation and its economy at this critical juncture. Monetary restraint and the incentives of lower tax rates will solve the dollar and unemployment problems.
In our supposedly post-partisan era, why not give it a try, President Obama?
Columbia professor and Nobel Prize winner Robert Mundell and Reagan advisor Arthur Laffer put this formula to work nearly 30 years ago, and it launched a massive low-inflation, bull-market prosperity. Of course, I am a supply-side fossil. I am a dinosaur and a relic of the past. But I still believe this approach could work again, even if it’s not going to happen.
The dollar has been falling on and off for nearly ten years, and it’s in big trouble right now. The commodity inflation, housing bubble, and oil shock of recent years all can be traced to dollar weakness and excess money-creation by the Fed. A weak dollar helped destroy the Bush Boom and create the Great Recession. But now people are talking about ending the dollar’s reserve-currency status.
According to London’s Independent, the Arab oil producers in the Gulf are planning with China, Russia, Japan, and France to end dollar transactions for oil and move instead to a basket of currencies that might include the Japanese yen, the Chinese yuan, and the euro, along with gold and some kind of regional Gulf-state currency.
I say, where there’s smoke there’s fire. The dollar-demise story just won’t go away, and it’s clear now that China and others have lost confidence in the greenback. For the U.S., this is mostly a self-inflicted wound. And the Treasury and the Fed are in denial about it. The gold price has jumped all the way to $1,050, while the dollar index has fallen again. Without question, the U.S. is creating too many dollars through the Fed, and fiscal disarray continues to threaten more of the same.
And here’s a real conflict brewing in the financial markets: The Fed is fighting deflation with a near-zero interest-rate target, while gold, the dollar, and commodity markets are signaling that inflation is the real problem. Somebody is going to be very right here, and somebody is going to be very wrong. I’m betting on the markets being right.
So I have a thought, at least for the short run: The Fed should follow Australia, the first G-20 country to raise its target interest rate. The Aussies lifted their rate a quarter point to 3.25 percent. Right now the U.S. Fed should lift its target rate by 25 basis points. The fed funds target is currently 15 basis points, so this move would make it 40 basis points. It would be a dollar-protection signal; a price-stability signal. At the least, it would be a beginning. Next, the Treasury should buy some dollars in the open market to back up the Fed.
And as the White House considers a second stimulus package, here’s another thought: Go for growth. Reduce tax rates to provide growth incentives (something Team Obama has avoided like the plague). Cut the top corporate tax rate from 35 to 25 percent, and accompany that with a small-business tax cut from 35 to 25 percent. And leave the Bush tax cuts alone. Don’t let them expire in 2011. That’s cap-gains, dividends, and the top personal rate.
Yes, this is a supply-side solution: Reducing tax rates will ignite growth incentives.
And by applying it, Team Obama would be borrowing from George W. Bush, Bill Clinton, Ronald Reagan, and John F. Kennedy. (And Calvin Coolidge and Andrew Mellon, too.) Forget about Keynesian spending multipliers, which Harvard’s Robert Barrow writes are less than one. Forget about class warfare. Forget about income redistribution. Go for growth.
Again, I know I’m a supply-side fossil and a relic of the past. But the Mundell-Laffer policy plan -- which has worked historically for Republicans and Democrats -- could truly save the nation and its economy at this critical juncture. Monetary restraint and the incentives of lower tax rates will solve the dollar and unemployment problems.
In our supposedly post-partisan era, why not give it a try, President Obama?
An Interview with Mike Pence
Is a new supply-side, fiscally conservative awakening at hand? Distinguished Congressman Mike Pence (R-Ind) – the #3 Republican in the House – joined me last night to discuss surefire ways to light a fire under the U.S. economy and get this country of ours growing again.
All Eyes on the Virginia Governor’s Race
National attention is turning to Virginia, where voters will choose their new governor this November. According to RealClearPolitics, the Republican gubernatorial candidate, Bob McDonnell, has the momentum and is pulling away in the polls. Right now he’s up 50-43.
I spoke with Mr. McDonnell last night on the race, his plans for Virginia, and whether to some extent, the race is a hidden referendum on President Obama.
I was impressed with Mr. McDonnell—he’s a big positive surprise.
I spoke with Mr. McDonnell last night on the race, his plans for Virginia, and whether to some extent, the race is a hidden referendum on President Obama.
I was impressed with Mr. McDonnell—he’s a big positive surprise.
Tuesday, October 06, 2009
Protect the Dollar; Go for Growth
Two big economic stories today.
The first is about the demise of the dollar. According to London’s Independent, the Arab oil producers in the Gulf are planning with China, Russia, Japan, and France to end dollar transactions for oil and move instead to a basket of currencies that might include the Japanese yen, the Chinese yuan, and the euro, along with gold and some kind of regional Gulf state currency.
The other big story is about a possible new stimulus package from Team Obama, which is panicking over the lousy jobs and unemployment numbers from last Friday.
As far as the currency story goes, I say where there’s smoke there’s fire. The dollar-demise story has been around for a while, and it keeps coming back. And it’s now clear that China and others have lost confidence in the greenback and want to end the dollar reserve-currency system. For the U.S., this is mostly a self-inflicted wound. And the Treasury and the Fed are in denial about this.
The gold price, by the way, has jumped $22 to $1,045. The dollar index has fallen again. Of course, the U.S. is creating too many dollars through the Fed, and fiscal disarray continues to threaten more of the same.
So I have a thought, at least for the short run: The Fed should follow Australia, the first G-20 country to raise their target interest rate. The Aussies raised their rate a quarter point to 3.25 percent. Right now the U.S. Fed should raise its target rate by 25 basis points. The fed funds target is currently 15 basis points, so this would make it 40 basis points. It would be a dollar-protection signal; a price stability signal. At least, it would be a beginning. Next, the Treasury should buy some dollars in the open market to back up the Fed.
As for the second stimulus package, here’s my plan: Go for growth. Reduce tax rates to provide growth incentives, something Team Obama has avoided like the plague. Cut the top corporate tax rate from 35 to 25 percent, and accompany that with a small-business tax cut from 35 to 25 percent. And leave the Bush tax cuts alone. Don’t let them expire in 2011. That’s cap-gains, dividends, and the top personal rate.
Yes, this is a supply-side solution. Reducing tax rates will spur growth incentives. Forget about Keynesian spending multipliers, which Harvard’s Robert Barrow writes are less than one. Instead, borrow from George W. Bush, Bill Clinton, Ronald Reagan, and John F. Kennedy. (And Calvin Coolidge and Andrew Mellon, too.) Forget about Keynesian spending. Forget about class warfare. Forget about income redistribution. Go for growth.
Of course, none of this is gonna happen, either on the dollar or tax rates. I am a supply-side fossil. I am a dinosaur. I am a relic of the past. But I still believe the Mundell-Laffer policy approach works: A stable King Dollar for price stability and low marginal tax rates for growth.
The first is about the demise of the dollar. According to London’s Independent, the Arab oil producers in the Gulf are planning with China, Russia, Japan, and France to end dollar transactions for oil and move instead to a basket of currencies that might include the Japanese yen, the Chinese yuan, and the euro, along with gold and some kind of regional Gulf state currency.
The other big story is about a possible new stimulus package from Team Obama, which is panicking over the lousy jobs and unemployment numbers from last Friday.
As far as the currency story goes, I say where there’s smoke there’s fire. The dollar-demise story has been around for a while, and it keeps coming back. And it’s now clear that China and others have lost confidence in the greenback and want to end the dollar reserve-currency system. For the U.S., this is mostly a self-inflicted wound. And the Treasury and the Fed are in denial about this.
The gold price, by the way, has jumped $22 to $1,045. The dollar index has fallen again. Of course, the U.S. is creating too many dollars through the Fed, and fiscal disarray continues to threaten more of the same.
So I have a thought, at least for the short run: The Fed should follow Australia, the first G-20 country to raise their target interest rate. The Aussies raised their rate a quarter point to 3.25 percent. Right now the U.S. Fed should raise its target rate by 25 basis points. The fed funds target is currently 15 basis points, so this would make it 40 basis points. It would be a dollar-protection signal; a price stability signal. At least, it would be a beginning. Next, the Treasury should buy some dollars in the open market to back up the Fed.
As for the second stimulus package, here’s my plan: Go for growth. Reduce tax rates to provide growth incentives, something Team Obama has avoided like the plague. Cut the top corporate tax rate from 35 to 25 percent, and accompany that with a small-business tax cut from 35 to 25 percent. And leave the Bush tax cuts alone. Don’t let them expire in 2011. That’s cap-gains, dividends, and the top personal rate.
Yes, this is a supply-side solution. Reducing tax rates will spur growth incentives. Forget about Keynesian spending multipliers, which Harvard’s Robert Barrow writes are less than one. Instead, borrow from George W. Bush, Bill Clinton, Ronald Reagan, and John F. Kennedy. (And Calvin Coolidge and Andrew Mellon, too.) Forget about Keynesian spending. Forget about class warfare. Forget about income redistribution. Go for growth.
Of course, none of this is gonna happen, either on the dollar or tax rates. I am a supply-side fossil. I am a dinosaur. I am a relic of the past. But I still believe the Mundell-Laffer policy approach works: A stable King Dollar for price stability and low marginal tax rates for growth.
On Tonight's Kudlow Report
This evening at 7pm ET:
STOCK MARKET DRILLDOWN
CNBC’s Brian Shactman reports.
THE DEMISE OF THE DOLLAR?
Where there's smoke there's fire…
Panel:
*Joseph LaVorgna, Deutsche Bank Chief U.S. Economist
*Adam Boyton, Deutsche Bank Sr. Currency Strategist, Fmr. Australian Treasury Official
*Andrew Busch, BMO Capital Markets; CNBC Contributor
GOLD STOCKS
Joining us to discuss will be Tom Winmill, Portfolio Manager The Midas Fund (MIDSX).
IS A FISCAL CONSERVATIVE 'AWAKENING’ AT HAND?
Rep. Mike Pence, (R, Indiana) will be aboard with his perspective on government spending, taxes, and how to create real economic growth.
STOCKS SHRUG OFF DOLLAR
*Rich Karlgaard, Forbes Publisher; "Life 2.0" Author
*Michael Cuggino, Permanent Portfolio Family of Funds President & Portfolio Manager
THE HOLIDAY RETAIL FORECAST
CNBC’s Jane Wells takes a look.
VIRGINIA GOVERNOR'S RACE
-Is this a harbinger of the midterms?
-Reflection of Obama's lost political capital
Bob McDonnell, (R) Virginia Gubernatorial Candidate will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
STOCK MARKET DRILLDOWN
CNBC’s Brian Shactman reports.
THE DEMISE OF THE DOLLAR?
Where there's smoke there's fire…
Panel:
*Joseph LaVorgna, Deutsche Bank Chief U.S. Economist
*Adam Boyton, Deutsche Bank Sr. Currency Strategist, Fmr. Australian Treasury Official
*Andrew Busch, BMO Capital Markets; CNBC Contributor
GOLD STOCKS
Joining us to discuss will be Tom Winmill, Portfolio Manager The Midas Fund (MIDSX).
IS A FISCAL CONSERVATIVE 'AWAKENING’ AT HAND?
Rep. Mike Pence, (R, Indiana) will be aboard with his perspective on government spending, taxes, and how to create real economic growth.
STOCKS SHRUG OFF DOLLAR
*Rich Karlgaard, Forbes Publisher; "Life 2.0" Author
*Michael Cuggino, Permanent Portfolio Family of Funds President & Portfolio Manager
THE HOLIDAY RETAIL FORECAST
CNBC’s Jane Wells takes a look.
VIRGINIA GOVERNOR'S RACE
-Is this a harbinger of the midterms?
-Reflection of Obama's lost political capital
Bob McDonnell, (R) Virginia Gubernatorial Candidate will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Saturday, October 03, 2009
Obama’s Olympic Blunder
First off, a big congratulations to Brazil. They are a rising nation—so good for them. That said, the Olympic rejection of Chicago in Copenhagen is deeply troubling to me. When a president acts on a last minute whim, as Obama did, there are huge international consequences.
Was President Obama trying to save Mayor Daley's re-election? I don't know. If he did have a higher motive, one rooted in broad based Olympic Americana, fine. But here's the deal: his failed five-hour whirlwind trip harmed American interests and American prestige around the world.
Obama’s ducks were never set in a row. Hence, the risk of defeat was simply far too great. It showed poor presidential judgment. Obama is playing with the prestige of the greatest country in the world, and the most powerful office in the world. This is precious capital. It must not be squandered; it must be harbored and protected carefully. It wasn’t.
It’s obvious that neither he, nor his inner circle of Chicago advisors, understood the inner workings of the International Olympic Committee, as evidenced by that lopsided vote. It was a huge mistake. Moreover, the IOC surely knew the polls showed half of Chicago was against it.
Coming back from Copenhagen empty-handed, President Obama now faces big questions like the one recently posed by my good friend Doug Kass: Does this symbolize the end of America’s financial and economic hegemony?
The conduct of international relations—both symbolically and operationally—is a delicate high wire act. It of the greatest importance in protecting both the security and reputation of the U.S.
Obama bungled this.
No, it's not the end of the world, but it is a big-time and ill-timed set-back.
Was President Obama trying to save Mayor Daley's re-election? I don't know. If he did have a higher motive, one rooted in broad based Olympic Americana, fine. But here's the deal: his failed five-hour whirlwind trip harmed American interests and American prestige around the world.
Obama’s ducks were never set in a row. Hence, the risk of defeat was simply far too great. It showed poor presidential judgment. Obama is playing with the prestige of the greatest country in the world, and the most powerful office in the world. This is precious capital. It must not be squandered; it must be harbored and protected carefully. It wasn’t.
It’s obvious that neither he, nor his inner circle of Chicago advisors, understood the inner workings of the International Olympic Committee, as evidenced by that lopsided vote. It was a huge mistake. Moreover, the IOC surely knew the polls showed half of Chicago was against it.
Coming back from Copenhagen empty-handed, President Obama now faces big questions like the one recently posed by my good friend Doug Kass: Does this symbolize the end of America’s financial and economic hegemony?
The conduct of international relations—both symbolically and operationally—is a delicate high wire act. It of the greatest importance in protecting both the security and reputation of the U.S.
Obama bungled this.
No, it's not the end of the world, but it is a big-time and ill-timed set-back.
More Unemployment Benefits Will Backfire
I’d like to weigh in on reports that the White House is currently negotiating with Congressional Democrats to extend unemployment insurance. It’s a big story in the Wall Street Journal. I want to suggest to you that more unemployment insurance right now is a very bad idea.
Here’s why: In supply-side terms, if the government subsidizes non-work, than we will get less work. In other words, higher unemployment.
This has been the European disease for decades. They heavily subsidized unemployment benefits. Guess what happened? Until recently, their unemployment rate was substantially higher than ours here in the U.S.
Already, the stimulus program for workers who lose their jobs up to this December 31st get 79-weeks of more unemployment benefits. That’s already in the stimulus legislation. In other words, they get another year-and-a-half on top of the benefit increase they already have from the normal social safety net. That is what’s so amazing.
Now I don't want to sound unnecessarily coldhearted. I like to think I’m compassionate. But supply-side economics is about incentives. And if we re-incentivize unemployment, it will surely diminish the will and the effort of our working people to find new work. That is an economic principle.
So the longer we extend unemployment benefits, and the larger we make them—including healthcare—the more unemployment we are going to get. There have been countless studies showing this. It is something we should consider.
I don't mean to sound heartless, or uncompassionate. But economic supply-side principles have a way of trumping the best of government intentions. And that is why a new stimulus package with more unemployment benefits will backfire and drive the jobless rate even higher.
Here’s why: In supply-side terms, if the government subsidizes non-work, than we will get less work. In other words, higher unemployment.
This has been the European disease for decades. They heavily subsidized unemployment benefits. Guess what happened? Until recently, their unemployment rate was substantially higher than ours here in the U.S.
Already, the stimulus program for workers who lose their jobs up to this December 31st get 79-weeks of more unemployment benefits. That’s already in the stimulus legislation. In other words, they get another year-and-a-half on top of the benefit increase they already have from the normal social safety net. That is what’s so amazing.
Now I don't want to sound unnecessarily coldhearted. I like to think I’m compassionate. But supply-side economics is about incentives. And if we re-incentivize unemployment, it will surely diminish the will and the effort of our working people to find new work. That is an economic principle.
So the longer we extend unemployment benefits, and the larger we make them—including healthcare—the more unemployment we are going to get. There have been countless studies showing this. It is something we should consider.
I don't mean to sound heartless, or uncompassionate. But economic supply-side principles have a way of trumping the best of government intentions. And that is why a new stimulus package with more unemployment benefits will backfire and drive the jobless rate even higher.
Friday, October 02, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:
A COMCAST/GE DEAL FOR NBC?
Can Comcast manage distribution & content?
CNBC’s David Faber reports.
The New York Times’s Andrew Ross Sorkin will also join us to lend his perspective.
OBAMA COMES BACK EMPTYHANDED FROM COPENHAGEN
Did Obama put America's credibility on the line?
NBC News’ Jay Gray reports from Chicago.
Debate:
*Steve Hayward, AEI Resident Scholar; "The Age of Reagan: The Conservative Counter Revolution"
*Walter Russell Mead, Senior Fellow for U.S. Foreign Policy, Council on Foreign Relations
TODAY'S BIGGER THAN EXPECTED JOBS LOSS
CNBC’s Bertha Coombs reports.
STOCK MARKET & ECONOMIC OUTLOOK
Panel:
*William Dunkelberg, National Federation of Independent Business Chief Economist
*Joseph LaVorgna, Deutsche Bank Chief U.S. Economist
*Jim LaCamp, Senior VP, Portfolio Manager Macroportfolio Advisors
*Peter Morici, University of Maryland Robert H. Smith School of Business Prof; U.S. Internat'l Trade Commission Fmr. Chief Economist
Please join us. The Kudlow Report. 7pm ET. CNBC.
A COMCAST/GE DEAL FOR NBC?
Can Comcast manage distribution & content?
CNBC’s David Faber reports.
The New York Times’s Andrew Ross Sorkin will also join us to lend his perspective.
OBAMA COMES BACK EMPTYHANDED FROM COPENHAGEN
Did Obama put America's credibility on the line?
NBC News’ Jay Gray reports from Chicago.
Debate:
*Steve Hayward, AEI Resident Scholar; "The Age of Reagan: The Conservative Counter Revolution"
*Walter Russell Mead, Senior Fellow for U.S. Foreign Policy, Council on Foreign Relations
TODAY'S BIGGER THAN EXPECTED JOBS LOSS
CNBC’s Bertha Coombs reports.
STOCK MARKET & ECONOMIC OUTLOOK
Panel:
*William Dunkelberg, National Federation of Independent Business Chief Economist
*Joseph LaVorgna, Deutsche Bank Chief U.S. Economist
*Jim LaCamp, Senior VP, Portfolio Manager Macroportfolio Advisors
*Peter Morici, University of Maryland Robert H. Smith School of Business Prof; U.S. Internat'l Trade Commission Fmr. Chief Economist
Please join us. The Kudlow Report. 7pm ET. CNBC.
A Backdoor Energy Tax from the EPA?
Sen. James Inhofe (R-Okla.) joined me on last night's show to discuss whether the Obama administration and the EPA is attempting to regulate us all back into recession.
Thursday, October 01, 2009
On the Kudlow Report Tonight
This evening at 7pm ET:
THE STOCK MARKET
WHAT TRIGGERED TODAY'S SELLOFF?
*Barry Ritholtz, Fusion IQ; Director of Equity; Big Picture Blogger
*Zachary Karabell, CNBC Contributor; River Twice Research President
*Mark Perry, University of Michigan-Flint economics & finance professor; "Carpe Diem" Blogger
THE CLIMATE BILL:
ANTI-GROWTH & HIGHER TAXES?
Sen. James Inhofe (R-Okla.), Ranking Member of the Environment and Public Works Committee will join us.
COMCAST & GE IN DEAL TALKS
CNBC's Scott Cohn reports.
*Andrew Ross Sorkin, The New York Times Deal Book Editor; NYTimes Chief Mergers & Acquisitions Reporter
*Carl DiOrio, Hollywood Reporter
FED ON RATES/ BERNANKE HEARING
*Bill Ford, Fmr. Atlanta Fed President; Middle Tennessee State University
*Lee Hoskins, Pacific Research Institute Senior Fellow; Fmr. Cleveland Federal Reserve Bank President
IRAN IN THE CROSSHAIRS
*Ken Timmerman, Middle East Data Project President; "Countdown to Crisis: The Coming Nuclear Showdown with Iran" Author
*Larry Korb, Assistant Secy. of Defense in the Reagan Admin.; Center for American Progress Sr. Fellow
Please join us. The Kudlow Report. 7pm ET. CNBC.
THE STOCK MARKET
WHAT TRIGGERED TODAY'S SELLOFF?
*Barry Ritholtz, Fusion IQ; Director of Equity; Big Picture Blogger
*Zachary Karabell, CNBC Contributor; River Twice Research President
*Mark Perry, University of Michigan-Flint economics & finance professor; "Carpe Diem" Blogger
THE CLIMATE BILL:
ANTI-GROWTH & HIGHER TAXES?
Sen. James Inhofe (R-Okla.), Ranking Member of the Environment and Public Works Committee will join us.
COMCAST & GE IN DEAL TALKS
CNBC's Scott Cohn reports.
*Andrew Ross Sorkin, The New York Times Deal Book Editor; NYTimes Chief Mergers & Acquisitions Reporter
*Carl DiOrio, Hollywood Reporter
FED ON RATES/ BERNANKE HEARING
*Bill Ford, Fmr. Atlanta Fed President; Middle Tennessee State University
*Lee Hoskins, Pacific Research Institute Senior Fellow; Fmr. Cleveland Federal Reserve Bank President
IRAN IN THE CROSSHAIRS
*Ken Timmerman, Middle East Data Project President; "Countdown to Crisis: The Coming Nuclear Showdown with Iran" Author
*Larry Korb, Assistant Secy. of Defense in the Reagan Admin.; Center for American Progress Sr. Fellow
Please join us. The Kudlow Report. 7pm ET. CNBC.
An Interview with the Next President of the United States?
Last night I had the pleasure of interviewing an old friend of the program, Texas Republican Senator and gubernatorial candidate Kay Bailey Hutchison. Among other things, we discussed why she's leaving Washington and heading back home to run against Gov. Rick Perry for the Governor's seat. I'll just say this: If she wins in Texas, she'll be president in 2012.
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