Wednesday Night Lineup

On CNBC's Kudlow & Company at 7pm ET tonight:

TODAY'S FED DECISION, GDP REPORT, MARKET REACTION & MORE...Our all-star panel of stock market, Fed, and economic experts will discuss and debate the day's market-moving news, trends, and developments.

On board:

*Wayne Angell, former Federal Reserve Governor
*Vince Farrell, managing director of Scotsman Capital
*Mike Ozanian, Forbes Magazine Senior Editor
*Bob McTeer, former President of the Federal Reserve Bank of Dallas
*Mark Skousen, financial economist, author, professor and editor of Forecasts & Strategies

MCCAIN'S HEALTHCARE PLAN...Joining us to debate Sen. John McCain's healthcare plan is "Supercapitalism" author and former labor secretary Robert Reich and former New York lieutenant governor and health policy expert Betsy Ross McCaughey.

THE STOCK MARKET, ECONOMY & FED...Our guests will offer their perspective on all of today's stock market and economic events.

On board:

*Jim Awad, chairman of WP Stewart Asset Management
*Brian Wesbury, chief economist at First Trust Advisors
*John Browne, senior market strategist at Euro Pacific Capital

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.

Recession? What Recession?

U.S. News & World Report's "Jimmy P" Pethokoukis and economist Jerry Bowyer - both regular contributors to Kudlow & Company - deliver two amusing takes on today's GDP number and the muddled response from the economic punditocracy. Incidentally, take a look at the Intrade pay-to-play prediction market's collapsing recession odds: they plummeted 20 points this morning. Talk about falling off a cliff.

Dude, Where's My Recession?
April 30, 2008 09:51 AM ET James Pethokoukis Permanent Link

Out: Recession. In: Expansion. That's my quick take on today's first-quarter gross domestic product number, which showed that the economy grew 0.6 percent in the first quarter. Now that's not a robust number by any means, but it's not so bad given all the worry out there that the economy is headed off a cliff. Before you declare a recession, as many economic pundits have, shouldn't the economy, well, actually recess a bit—if only for a quarter?

Remember, the shorthand rule for declaring a recession is back-to-back quarters of negative growth. The semiofficial recession judge, the National Bureau of Economic Research, has a more complex formula, but I am not sure it has ever declared a recession when the economy never actually shrank. And consider this: The Intrade online betting market now says there is a meager 25 percent chance of a recession—using the negative-back-to-back-quarters definition—in 2008.

Plus, don't forget that there's a lag before all that monetary stimulus from the Fed kicks in. (It's not too late to do nothing today, Bernanke!) Who knows—those rebate checks might even help a bit, though we're probably not getting much bang for the nearly $200 billion we're spending.

As a movie buff, I keep looking for the right cinematic analogy for the American economy. Try this one: It's like the Terminator. Not the Schwarzenegger one—the other one, the Terminator from the second film. You could empty a shotgun—or in this case, an imploding housing market, credit crunch, and high oil prices—into that morphing metal dude, and before you know it, the thing's all healed and chasing you again.

* * * * * * * * * * * * * * * * * *

-----Original Message-----
From: Jerry Bowyer
Sent: Wednesday, April 30, 2008 11:09 AM
Subject: RE: We Are In a Recession

Okay, so here we are again. Another quarter and another plus sign. The economy grew every quarter last year and, so far, it's continued to grow this year. The pessimistic-financial-pundit-industrial complex suffers another quarter of model-crushing data. Will they change their models? Don't count on it. Fear sells, it sells newsletters; it sells bookings; it sells speaking gigs.

Today, brace yourself for the tribe of Yesbuts.

Yes, but the postive GDP is from inventory adjustments.
Sure it is. Shouldn't inventory be counted in GDP?

Yes, but it's also from government expenditures.
Shouldn't government spending be counted in GDP. Especially for those Yesbuts on the left...it seems that you see government expenditures as being a good thing, except when they boost growth.

Yes, but Gross Domestic Income differs a little.

GDI is a fine statistic, which will be rediscovered today in a desperate search for bad news. Even as I write, financial pundits are dusting off their college Macroeconmics textbooks and rifling through pages trying to relearn how GDI is calculated. Let me save you the trouble. Its made up of personal income, plus business profit, plus sole proprieter income. The business profit is domestic only, hence the D in GDI. If you want to capture the productive power of US business overseas, look at the long-neglected GNP, which has been doing quite well lately. Though, it's not out for Q1 yet.

Yes, but durable goods were down in Q1.

Indeed they were, which means that the rest of the economy was strong enough to pull us into positive territory. On top of that durable goods were down, not because of economic weakness but because some probusiness investment tax cuts expired in December and were not reinstated until halfway through the first quarter. It wasn't recession; it was a temporary tax code distortion.

For the perma-pessmists who were flat out 100% sure that 'we're already in a recession, the debate is about how long and how deep' - back to the spreadsheets.

For the rest of you - have a nice day.

Jerry Bowyer

Chief Economist Benchmark Financial

Tuesday Night Lineup

On CNBC's Kudlow & Company at 7pm ET tonight:

THE MARKETS & ECONOMY...Our stock market panel will discuss and debate all the latest news, trends, and developments affecting the stock market and economy.

On board:

*Joe Battipaglia, market strategist at Stifel Nicolaus
*Don Luskin, chief investment officer at Trend Macro
*Jerry Bowyer, chief economist at Benchmark Financial Network
*Herb Greenberg, senior Marketwatch columnist/CNBC contributor

OIL, ETHANOL, & MORE...Syndicated columnist Deroy Murdock and economist Jared Bernstein will join the market panel with their perspectives in a discussion/debate over rising commodity prices.

DEBATE: YOUR MONEY, YOUR VOTE...Our Washington to Wall Street guests will square off on a host of hot-button primary politics issues.

On board:

*Ann Coulter, syndicated columnist
*Tanya Acker, independent media, legal and political consultant

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.

Bush Whiffs on the Dollar

In his news conference today President Bush really didn’t get to the key point on soaring gas and food prices: The best short-term policy is to strengthen the dollar. Bring back King Dollar.

Whether it’s energy, wheat, grain, corn, or whatever, since these raw materials are priced in dollars on global markets, a strong greenback will reduce commodity prices. And that, in turn, will lower both consumer and producer inflation. This would help corporate profits and would boost the purchasing power of wages.

In other words, a strong dollar would relieve gas prices and boost the economy. But so far as I know, the president never mentioned the dollar. And I don’t think any of the media people asked him about it.

Right now Mr. Bush should order his Treasury Secretary to appreciate the greenback and work with the G7 for concerted action that would send a strong signal to commodity and currency traders that they better close their short positions on the dollar and stop speculating on higher and higher commodity prices. Mr. Bush himself should adopt new rhetoric on a strong dollar. He should make it unambiguous.

In today’s consumer confidence report, inflation expectations surged to 6.8 percent for the next year. One year ago they were 5.1 percent. This is not good. And of course, gasoline prices at the pump as well as supermarket prices for food are becoming huge political issues. Huge! Bigger than the war and bigger than the economy.

Additionally, the president really missed the ethanol questions. He acknowledged that ethanol mandates are contributing roughly 15 percent to rising food. But he didn’t indicate any interest in eliminating the ethanol subsidy (a subject on which Deroy Murdock has artfully written).

The president was dead right in opposing the huge $280 billion farm bill. But on ethanol and the greenback he whiffed.

This is too bad, because the Fed meets tomorrow and is likely to end its interest-rate cuts after one more quarter point. I would prefer the central bank not even make the last cut to 2 percent. Money-market futures are now predicting a higher fed target rate next year. And if that expectation pans out, it will give a boost to the dollar and reduce all these inflationary pressures.

But defending the currency should also be done by the commander in chief and his Treasury man. As the Fed begins to shift gears, now would be a great time to resurrect the dollar.

Truly, we need a return to King Dollar and an end to the U.S. peso. Senator John McCain, are you listening?

Monday Night Lineup

On CNBC's Kudlow & Company at 7pm ET tonight:

THE MARKETS, M&A, & MORE...Our stock market all-stars will discuss and debate all the latest news, trends and developments affecting investors.

On board:

*Gary Shilling, president of A. Gary Shilling & Co.
*Vince Farrell, managing director of Scotsman Capital
*Andy Busch, global FX strategist at BMO Capital Markets
*Andrew Ross Sorkin, New York Times reporter

THE FED & ECONOMY...The Wall Street Journal's Steve Moore will join Messrs. Shilling, Busch and Farrell with a look ahead at this week's Fed meeting and the state of the U.S. economy.

OIL, ENERGY, FOOD & GAS PRICES, ETC...Our energy experts will join the market panel with some perspective on rising prices.

On board:

*John Kilduff, vice president of risk management at MF Global Ltd
*Dan Yergin, Cambridge Energy Research Chairman

DEBATE: THE DYNAMIC DUO... Robert Reich, public policy professor at UC/Berkeley & former labor secretary under President Clinton will square off against the WSJ's Steve Moore.

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.

The Fed Needs to Stop

The Fed needs to stop cutting interest rates and halt the run on the dollar. They can do this by announcing a lengthy pause in their interest rate statement due out this Wednesday at 2:15 pm.

Over the past month or so, gold has dropped, and the dollar has stabilized. This is because investors sense that the Fed is finally coming to the end of their rate cutting. Another quarter-point cut later this week would be a bad idea.

Gold, oil, and food commodity prices have all exploded in recent months as the Fed has over-stimulated its easing polices. The real fed funds rate remains negative. And in a market-based bond model, the negative real fed funds rate remains far below the economy’s so–called natural rate. It’s the lowest since the spring of 2005. It’s no wonder there’s been a big run against the greenback.

Voters are irate over the higher cost for gas and food. Truck drivers are preparing to march on Washington, D.C. in a strike against soaring prices for diesel fuel. Meanwhile, politicians on both sides of the aisle are making goofy policy proposals like instituting a windfall profits tax (Hill-Bama) or declaring a summer gas tax holiday (McCain). Yes, of course we need a good energy policy with a broad portfolio of all energy sources. No question about it. But let’s be very clear: the Federal Reserve has played a lead role in creating this energy and food price debacle.

As one of the financial news services put it today, Fed chair Ben Bernanke needs to act more like his hard money predecessor Paul Volcker, in order to avoid becoming stagflationist Arthur Burns.

It’s time to stop.

Friday Night Lineup

On CNBC's Kudlow & Company at 7pm ET tonight:

THE MARKETS, ECONOMY, FED, DOLLAR & MORE...Our all-star panel of stock market and economic experts will discuss and debate all the latest news, trends, and developments affecting investors.

On board:

*Joe Battipaglia, market strategist at Stifel Nicolaus
*Brian Wesbury, chief economist at First Trust Advisors
*Steve Moore, senior economics writer at the Wall Street Journal
*Stefan Abrams, Bryden-Abrams Investment Management managing partner

ETHANOL & FOOD INFLATION...Syndicated columnist Deroy Murdock and Frank Gaffney, president of the Center for Security Policy, will join Messrs. Battipaglia and Abrams with a look at the controversial biofuel.

WASHINGTON TO WALL STREET...Our money politics panel will debate all the latest hot-button issues including whether we're really in a recession, tax rebate checks and McCain & taxes.

On board:

*Walt Williams, economics professor at George Mason University
*Steve Moore, senior economics writer at the Wall Street Journal
*Jared Bernstein, senior economist at the Economic Policy Institute

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.

K&C Quotables

Some notable quotes from last night's Kudlow & Company:

Fed Finally Gets It Right It all goes back to March 17th. Bear Stearns Monday. That’s when the world changed. That’s when the Fed figured out that it could solve the credit crisis by something other than cutting the funds rate. And so, ever since then, all of these different markets have gradually, more and more, come to realize that it’s “one and done” at this point, at the most. And that the Fed is going to start hiking again, as soon as October. The futures markets are now looking at three rate hikes out a year from now. That strengthens the dollar; it weakens gold; it weakens oil. It’s great for stocks because it means that the Fed is going to stop fueling the inflation machine. And that there’s confidence that the credit crisis has been mastered. This is just fantastic news.

-Don Luskin, Chief Investment Officer at Trend Macro

A Bullish Signal When you narrow risk premiums, stock markets soar. When you widen risk premiums, stock markets tank. We’ve had wider risk premiums, whether you use the junk bond spread, or some other spread. There’s a hundred ways to measure risk premiums. They have peaked in the last few weeks. They are beginning to narrow. Stock markets recognize it. The process is finally working.

-David Kotok, co-founder & CIO of Cumberland Advisors

Schadenfreude We’ve found out from Pennsylvania just how deep the divisions are in the Democratic Party. The media often talks about the divisions in the Republican Party, but we’ve got our nominee. That’s done. We’ve been united for some time. The Democrats have very serious divisions. They have race, gender, age, class divisions…you don’t just heal that. You don’t just heal that with a nice convention. You don’t just heal that by taking a certain position on an issue. I mean, these are very deep divisions in the Democratic Party that go back forty years to the riots of ‘68. It spells serious trouble for them in November.

-Jerry Bowyer, chief economist at Benchmark Financial Network

Stop the (Ethanol) Madness

Take a couple minutes to read NRO contributing editor Deroy Murdock's scathing rebuke of U.S ethanol policy. It's an excellent piece. Just dynamite. And it's loaded with a ton of great facts.

Here's a snippet:

To draw a phrase from the late, great William F. Buckley Jr.’s words as he founded National Review, someone must stand athwart the federal ethanol program yelling, “Stop!” The emergency brake should be pulled — NOW — before ethanol wreaks further havoc.

...Congress should abolish federal ethanol subsidies, mandates, and the 54-cent-per-gallon tariff on imports — including Brazil’s cheaper, cleaner, sugar-based ethanol. If scientists can develop ethanol that neither starves people nor rapes the Earth, splendid. However, this enterprise must not rest upon morally repugnant, ecologically counterproductive, economically devastating, government-ordered distortions.

It’s time for emergency legislation to repeal ethanol-market meddling. The federal program began as a sop to U.S. grain growers — arguably the most pampered and endlessly entitled people this side of the Saudi royal family. It has grown into a cancer on global food markets....

Click here for more.

A Big Mac Attack

All this postmortem election stuff is getting boring. But the stock market appears to be feasting on a McCain victory in November against either Hillary or Obama – especially Obama. Market indexes are having a terrific rally right now. In fact, they have been rallying ever since late January, when McCain emerged as the Republican nominee.

Sure, Mac may occasionally bash business, but he does want to lower the corporate tax rate. This is very good. And he also wants to keep investment tax rates low. Also very good. It’s been good enough for a stock rally, which may be capitalizing a McCain victory into share prices. Premature? Perhaps. But it’s one way to read the market’s move.

Here’s another key point: the front-page of today’s Wall Street Journal hints at the end of Fed easing moves. Another plus in the bullish column. Take a look at the price of gold. It has cratered down below the $900 mark. It peaked at $1009, just over a month ago on March 18. Meanwhile, the dollar engineered its best rally today against the euro since 2004. So maybe the US peso is dollarizing itself on the hope that the Fed will stop easing.

Finally, the stock market rally, along with a healthy rise in long-term Treasury rates, may be signaling that the “non-recession” recession will give way to a much stronger second half economy. This scenario becomes increasingly likely if a rising dollar snuffs out spiking energy prices. I hope so. Because no matter how weak, and no matter how disjointed the Democrats may look right now, Big Mac is going to need all the help he can get come November.

Thursday Night Lineup: Special Washington Edition

On CNBC's Kudlow & Company at 7pm ET from Washington tonight:

THE MARKETS, ECONOMY, FED, EARNINGS & MORE...Our stock market and economic all-stars will discuss and debate all the latest news, trends, and developments affecting investors.

On board:

*Don Luskin, chief investment officer at Trend Macro
*Jack Gage, Forbes magazine associate editor
*Joe LaVorgna, chief U.S. economist Deutsche Bank
*Jerry Bowyer, chief economist at Benchmark Financial Network
*Jim Awad, chairman of WP Stewart Asset Management
*David Kotok, co-founder & CIO of Cumberland Advisors Philadelphia
*Herb Greenberg, senior Marketwatch columnist/CNBC contributor

WASHINGTON TO WALL STREET...House Ways and Means Chairman Charlie Rangel (D-NY) will join me for a one-on-one interview in the studio.

Our stock market panel will weigh in with its money politics perspective following my interview with Rep. Rangel.

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.

K&C Quotables

Some notable quotes from last night's Kudlow & Company:

Farrell’s Pearls of Wisdom The market can stay irrational far longer than you and I can stay solvent.

If somebody stood up and said, we must defend the dollar, stop cutting interest rates, [then] the dollar rallies, oil comes down, and the market takes on another leg.

-Vince Farrell, managing director at Scotsman Capital Management

Rescuing the U.S. Peso The key for the dollar going forward is we’ve got to get the Fed to stop cutting rates. That’s the first thing. And then we need the [European Central Bank] to just cool it with all this ridiculous, hawkish talk. They need to either let the currency go, let it strengthen to 170, and then raise rates. Or shut up, and not raise rates, and just let [the euro] relax a little bit.

-Andy Busch, global FX strategist at BMO Capital Markets

Rising Food Prices I just spent several days with farmers in the midwest. The biggest cost for them? The reason food prices are rising? Diesel costs. These energy costs are skyrocketing. [When] farmers’ prices go up, prices go up at the store.

Kevin Kerr, president of Kerrtrade.com and editor of MarketWatch's Global Resources

Beware the Taxman I talked to two of my clients yesterday. These are top-drawer clients, seven, eight figure accounts. And they were both saying look, if Barack Obama or Hillary look like they’re going to get elected, we need to be selling. We need to be ahead of everybody else selling in anticipation of a capital gains [tax hike].

-Jim Lacamp, portfolio manager at RBC Dain Rauscher

Wednesday Night Lineup: Special Washington Edition

On CNBC's Kudlow & Company at 7pm ET from Washington tonight:

THE MARKETS & ECONOMY...Our stock market all-stars will discuss and debate all the latest news, trends, and developments affecting investors.

On board:

*Doug Kass, founder & president of Seabreeze Partners Mgmt
*Jim LaCamp, portfolio manager at RBC Dain Rauscher
*Vince Farrell, managing director of Scotsman Capital
*Andy Busch, global FX strategist at BMO Capital Markets
*Kevin Kerr, president of Kerrtrade.com and editor of MarketWatch's Global Resources

DOES HILLARY'S WIN BELONG TO MCCAIN?...Top pollster Scott Rasmussen from Rasmussen Reports will provide all the latest polls and perspective in our primary politics discussion.

MCCAIN & TAXES...Our money politics panel will debate McCain's proposed tax cuts and whether we can afford them.

On board:

*Douglas Holtz Eakin, top economic adviser to John McCain and former director of the Congressional Budget Office
*David Walker, former comptroller general and head of the Government Accountability Office
*Steve Moore, Wall Street Journal senior economics writer

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.

K&C Quotables

Some notable quotes from last night's Kudlow & Company:

An Ideological Gulf [If Obama is the Democratic nominee] this is going to be – ideologically – the greatest distinction that we’ve had in candidates since the 1980 election when Jimmy Carter ran against Reagan. The Republicans have actually selected probably about the best candidate that they could in John McCain—in terms of his ability to reach out to the centrist-moderate wing of the party. The Democrats, on the other hand, have moved way to the left. I’m not sure that Barack Obama can win those Reagan Democrats.

-Steve Moore, senior economics writer and member of the Wall Street Journal editorial board

No Time to Turn Our Back There’s a fundamental problem in this country. I don’t think people understand two things that are important to us. One is, foreign markets are critically important to our future, for virtually every company. And second, we need foreign capital. This is not the time to be turning our back on the global economy. And also, the question is, if you want to renegotiate NAFTA, for instance, what are we prepared to put on the table? If it’s a negotiation, we’re going to have to give, if we want to get. What are we prepared to give? These kinds of questions really need to be addressed in a much more substantial way.

-Robert Hormats, Vice-Chairman of Goldman Sachs International

Where’s the Beef? It’s very hard to predict what the future behavior would be of a person who’s had no past record of actually initiating anything. But what we do know about Senator Obama is he has the most liberal voting record of anybody in the Senate. Therefore, we can observe that he will go along with any left-wing scheme that comes along. While he’s never had a policy initiative of his own, we could expect that if he were to win the White House, he would take the initiatives that came out of Congress – an increasingly more liberal and emboldened Congress – and you’d get many left-wing schemes coming out of the House and Senate to his desk, which he would sign, and embrace, and call his own. [Obama] is a fascinating person. It’s so hard for me to understand how a person who is so wholly devoid of any on-the-job, policy accomplishment can take the job with these kinds of responsibilities, having demonstrated none in his life.

-Former House Majority Leader Dick Armey

Special Tuesday Night Lineup - The Pennsylvania Primary

On CNBC's Kudlow & Company at 7pm ET tonight:

THE MARKETS, ECONOMY & PA PRIMARY...Our all-star panel of stock market and economic experts will discuss and debate all the latest news, trends, and developments affecting investors. We'll also spend some time covering the developments in the presidential race.

On board:

*Vince Farrell, managing director, Scotsman Capital
*Don Luskin, chief investment officer, Trend Macro
*Quentin Hardy, Forbes Silicon Valley bureau chief
*Steve Moore, senior economic writer, Wall Street Journal
*Jared Bernstein, senior economist, Economic Policy Institute
*Bob Hormats, Goldman Sachs International vice-chairman

PA PRIMARY UPDATE...CNBC'S John Harwood will join us live from Philadelphia with an update.

WASHINGTON DEBATE...Squaring off will be former House Majority Leader Dick Armey and Keith Boykin, New York Times bestselling author and former Clinton White House aide

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.

Strong Dollar, Anyone?

Investors worried about the dollar, as I am, should really take a look at the recent London Daily Telegraph story written by Ambrose Evans-Pritchard. He reports an interview with Jean-Claude Juncker, the Luxembourg premier and chair of Eurozone financiers who is also known as the EU’s “Mr. Euro.” The interview strongly hints of a G7 action to halt the collapse of the dollar and bring an end to commodity speculation by hedge funds.

According to the piece, Juncker met with President Bush in the White House at Bush’s request, just before the latest G7 meeting. The two men discussed the dangers of protectionism, and Juncker apparently warned Bush of the need for the U.S. to take steps to halt the dollar’s slide.

According to Evans-Pritchard, Juncker said, “I don’t have the impression that financial markets and other actors have correctly and entirely understood the message of the G7 meeting.” Juncker is referring to a more aggressive G7 policy statement about monitoring currency volatility. Recently, I have been writing of the need to make this even clearer, by referring to a policy of dollar appreciation. You may recall that a little over twenty years ago, the G7 clearly stated a policy of non-dollar appreciation at the 1985 Plaza Accord in New York.

I can’t help but wonder whether some kind of dollar rescue mission isn’t out there in the near-term. And I agree with Mr. Juncker that a dollar appreciation would halt speculation in energy, gold, and other commodities. As of this writing, oil’s up over a buck, trading at $118.50. Meanwhile, the euro registered another high against the dollar, finally breaking through the 1.60 barrier.

For the life of me, I can’t figure out why Sen. McCain isn’t making a big pitch for a strong-dollar policy, thereby separating himself from President Bush’s dollar-neglect. In our interview last week, I pressed Sen. McCain on this issue, but he’s not yet quite committed to monetary actions for the dollar, though he does in a general way want a strong dollar.

Incidentally, former Fed chair Paul Volcker — Mr. Hard Money himself — who endorsed Barack Obama back in February, recently said that the dollar is already in a crisis. Wouldn’t it be a hoot if Volcker persuaded Obama to come out for a strong-dollar policy? Obama could make a populist pitch to protect the purchasing power of the wages of all those “bitter” small-town folks who are clinging to guns and God in the hinterland.

A big hat tip and many thanks to my friend Jimmy Pethokoukis over at U.S. News & World Report for noticing that I keep raising the dollar as a potential key issue in this presidential race. Food and gas prices are soaring. Big increases in the consumer price index are undermining worker wages.

So here’s the question: Which candidate, if any, is going to claim the lead on strong-dollar policy?

Novak: “McCain, Portman, and Victory”

Bob Novak, the highly distinguished veteran columnist and author, told the American Spectator New York dinner group last night that John McCain will defeat Barack Obama in November’s election, although the Democrats will enhance their majorities in both the Senate and the House. Novak, who has covered elections for fifty years, speculated that McCain will pick former Ohio congressman Rob Portman (who also was President Bush’s special trade representative and OMB director) as his running mate, while Obama could choose former Sen. Sam Nunn as his.

On Portman, Novak said he’s young, will pass the conservative spell check, and can stand up in a debate. Our speaker also told us that the GOP has stumbled into the exact right candidate this year in McCain. Regarding McCain’s tax-cut proposals, Novak thinks they are real, and that cutting the corporate tax rate, as McCain has proposed, should be much more important to observers than the candidate’s occasional corporate and Wall Street bashing.

Novak also believes Obama’s gaffes about bitter small-town people who cling to guns and religion will be an absolute killer in the general election. So will the Jeremiah Wright business, and more generally Obama’s extreme, across-the-board, liberal-left positions.

The veteran journalist also responded emphatically to a question about media- and investment-driven pessimism that seems to permeate the airwaves today. He noted how much better off this country is today compared to the 1930s and 1970s. He observed that the Reagan supply-side revolution has created a vastly better economy than anything he has ever seen in his lifetime. Slowdowns come and go, but the underlying economy is strong.

It was a bravura performance from someone who has been a friend and mentor to me for three decades. Wonderful to see.

Monday Night Lineup

On CNBC's Kudlow & Company at 7pm ET tonight:

THE MARKETS, ECONOMY, EARNINGS & MORE...Our all-star panel of stock market experts will discuss and debate all the latest news, trends, and developments affecting investors.

On board:

*Gary Shilling, president of A. Gary Shilling & Co.
*Vince Farrell, managing director of Scotsman Capital
*Andy Busch, global FX strategist at BMO Capital Markets
*Dennis Kneale, CNBC media and technology editor

$125 OIL IN THE CARDS?...John Kilduff, vice president of risk management at MF Global Ltd, will join the aforementioned guests with his take on what's behind the rising price of oil and what may lie ahead.

TOP POLLSTERS TALK PENNSYLVANIA & PRIMARY POLITICS...Scott Rasmussen, president of Rasmussen Reports and John Zogby, president of Zogby International, will offer their key insights and what the polls are revealing ahead of tomorrow's critical contest.

MONEY POLITICS...Squaring off this evening in our Washington to Wall Street segment will be former Clinton labor secretary Robert Reich and economist Jerry Bowyer.

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.

K&C Quotables

Some notable quotes from Friday night's Kudlow & Company:

Good News for the Greenback? We’ve had a string of Fed governors finally come out and say that they’re uncomfortable with the level of inflation. When you get a plethora of these guys out there all saying the same thing, they’re sending a strong message. They’re saying we’re uncomfortable, and we may not give the market that extra 25 basis points at the end of the month—because we are uncomfortable with [inflation]. So that helped the dollar.
-Andy Busch, global FX strategist at BMO Capital Markets

Skousen Senses Opportunity It’s possible that we’re not out of this recession. However, [remember] Fed policy. Don’t fight the Fed. Anybody who is fighting the Fed right now – in cash, T-bills at a little bit over 1 percent – why would anyone be in cash at this point? These are tremendous opportunities. This is the time to get into the market. It’s all about globalization. Forget the U.S. economy, it’s globalization. Things have changed. Things have changed in the last ten to twenty years. The global economy is far more important. So when the U.S. catches a cold, the world does not catch pneumonia.
-Mark Skousen, financial economist & author of EconoPower

Obama & Capital Gains If Obama gets in, I think it’s a catastrophe—if he puts through the policies he’s saying. [His exchange with ABC’s Charlie Gibson on taxing capital gains] was one of the most ridiculous give-and-takes I have ever seen. It was just silly beyond belief. [Obama] almost accepted it, and then he says he wants to raise taxes on capital gains, “cause it’s fair” – and not because it will help people, not because it will provide more revenues. It’s ridiculous what he said. [Obama economic advisor] Austan Goolsbee should be priming him on this stuff. It just doesn’t make any sense.
-Arthur Laffer, supply-side economist & president of Laffer Associates

Reich Reaches Hillary Tipping Point I guess I just reached the tipping point this week, in terms of negative mudslinging by the Clinton camp. [It’s] bringing both [candidates] down. This is the old politics… Given the scale of the problems the nation now faces…this kind of petty mudslinging has got to stop. I just couldn’t stand it [anymore]…Obviously, I was not going to endorse anybody, because I’ve know the Clintons for decades. It just seemed to be inappropriate to endorse anybody. But I reached a tipping point this week…I’m sick and tired of it. I’m fed up.
-Robert Reich, former Clinton labor secretary

Friday Night Lineup

On CNBC's Kudlow & Company at 7pm ET tonight:

THE MARKETS & ECONOMY...Our all-star panel of stock market and economic experts will discuss and debate all the latest news, trends, and developments affecting investors.

Topics will include the recession story - Is the worst behind us?...Earnings...Caterpillar...Citigroup, etc...Inflation...Libor...The Dollar...and more.

On board:

*Art Laffer, economist, president of Laffer Associates
*Andy Busch, global FX strategist at BMO Capital Markets
*Stefan Abrams, Bryden-Abrams Investment Management managing partner
*Kevin Kerr, president of Kerrtrade.com and editor of MarketWatch's Global Resources
*Mark Skousen, financial economist, author, professor and editor of Forecasts & Strategies

THE DYNAMIC DUO TACKLES WASHINGTON & WALL STREET...Reich & Moore will discuss all the latest money politics issues including former Clinton labor secretary Reich's endorsement of Sen. Barack Obama earlier today.

On board:

*Robert Reich, former Clinton labor secretary, professor of public policy at UCal Berkeley, and "Supercapitalism" author
*Steve Moore, senior economic writer & member of the Wall Street Journal editorial board

Please join us at 7pm ET on CNBC for another free market edition of Kudlow & Company.