Monday, January 31, 2011

On CNBC's Kudlow Report Tonight

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

MARKETS

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

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

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

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

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

WICKED WEATHER WATCH
- Todd Santos, The Weather Channel

FLORIDA FEDERAL JUDGE DEALS BLOW TO OBAMACARE

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

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

Please join us at 7pm ET on CNBC.

Saturday, January 29, 2011

Food Riots: Is Bernanke Partially to Blame?

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

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

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

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

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

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

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

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

Friday, January 28, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

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




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

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

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

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

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

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

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

Please join us at 7pm ET on CNBC.

Thursday, January 27, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

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




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

SHOULD MICROSOFT BE BROKEN UP?

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

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

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

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

CAN OBAMA DELIVER ON CORPORATE TAX REFORM?

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

Please join us at 7pm ET on CNBC.

Wednesday, January 26, 2011

One-On-One with Gov. Chris Christie

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










Christie: Showing Washington How to Get It Done

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

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

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

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

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

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

DOW FLIRTING WITH 12,000

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

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

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

WICKED WEATHER WATCH

- Eric Fisher, Weather Channel

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

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

Please join us at 7pm ET on CNBC.

Tuesday, January 25, 2011

Mr. ‘Investment’

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

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

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

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

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

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

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

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

On CNBC's Kudlow Report tonight:

MARKETS

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

WILL OBAMA PROPOSE A CORPORATE TAX CUT?

- Gov. John Engler, Business Roundtable President

STATE OF SPENDING & TAXING

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

STATE OF THE UNION PREVIEW

- CNBC chief Washington correspondent John Harwood reports from Washington.

FEDERAL RESERVE FOCUS

Sen. Rand Paul, (R) Kentucky

MARKETS: REACT TO RAND PAUL ON FED

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

STATE OF SPENDING & TAXING

Sen. John Thune (R) South Dakota

Please join us at 7pm ET on CNBC.

Monday, January 24, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

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

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


GLOBAL INFLATION FEAR RISING

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

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

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

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

RUSSIAN TERROR ATTACK IMPLICATIONS

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

Please join us at 7pm ET on CNBC.

Saturday, January 22, 2011

GE’s Immelt on the Hot Seat

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

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

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

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

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

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

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

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

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

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

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

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

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

Send the Ultimate Message to China

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

Times are different today.

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

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

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

Pro-Union Is Not Pro-Regulatory Reform

President Obama pledged allegiance to the free-market this week, arguing for a 21st Century regulatory system that is balanced and pro-growth.

Fine.

But one thing he didn’t mention is his unbalanced policy that favors unions over business.

The Department of Labor is full of former union executives and short on business people. The DOL policy is to promote high rates of union membership. That still includes card check, which would deny the secret ballot to workers in unionization quarrels. It also includes a neighborhood-watch-style system to investigate wage and hour violations by companies, all while there is no investigation of rampant union fraud.

The current Solicitor of Labor, Patricia Smith, specialized in corporate intimidation when she served in a similar post in New York. And Labor Secretary Hilda Solis has turned fraud investigators at the DOL into business-intimidation tools.

I’m not against private unions. But there must be a hands-off attitude, rather than a full-scale, pro-union push.

Right now, the Obama administration is totally pro-union and anti-business. That needs to be fixed if the president is to make good on his regulatory-reform promise.

Friday, January 21, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: EUROPEAN STOCKS SOAR…GOLD AT A TWO MONTH LOW; GREAT DAY FOR GE'S JEFF IMMELT; EYE ON THE BANKS




- Keith McCullough, Founder & CEO of Hedgeye Risk Management
- Lee Munson, Portfolio Asset Management Chief Investment Officer
- Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer

RED CHINA RISING…CHINA’S DEAL TO BUY U.S. BANK

- Mark Callabria, CATO Director of Financial Regulation Studies
- Peter Navarro, "The Coming China Wars" Author; University Of California - Irvine Business Professor

KUDLOW COMMENTARY…PRESIDENT OBAMA TAKES ANOTHER STEP TO THE RIGHT BY NAMING GE'S JEFF IMMELT TO HEAD NEW WHITE HOUSE JOBS PANEL

FREE MARKET FRIDAY
THIS WEEK'S HOT TOPICS:

1. OBAMA'S GREAT LEAP RIGHT
2. GOOGLE VS. FACEBOOK - IS ERIC SCHMIDT OUT BECAUSE OF HIS AGE?
3. "SKINS" - MTV PORN?

- Chrystia Freeland, Thomson Reuters Global Editor at Large
- Kellyanne Conway, The Polling Company President & CEO
- Zach Karabell, CNBC's Fast Money Contributor River Twice Research President

TUNISIA IN TURMOIL
- Richard Engel, NBC News

Please join us at 7pm ET on CNBC.

Thursday, January 20, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: CHINA CAUSING A COMMODITY CRACK-UP? IS CHINA A RED VAMPIRE SQUID?...FOREIGN INFLATION - WILL WE CATCH THE VIRUS? … EYE ON TECHNOLOGY STOCKS … POSITIVE ECONOMIC DATA



- Mike Ozanian, Forbes Executive Editor
- Michael Cuggino, Permanent Portfolio Family of Funds President & Portfolio Manager
- Jim Iuorio, Director, TJM Institutional Services; Options Action Contributor

SHAKE UPS AT TWO TECH GIANTS: HP & GOOGLE

- CNBC’s Herb Greenberg has the full report.

HOW WOULD A PRESIDENT DANIELS HANDLE CHINA? WHAT'S HIS STATE FISCAL FIX? HOW ABOUT HEALTHCARE?

- Gov. Mitch Daniels (R-Indiana) will join us.

RED CHINA VAMPIRE SQUID RISING? ARE WE LETTING CHINA GRAB ALL THE WORLD'S OIL?

- T. Boone Pickens, Legendary Texas Oilman; BP Capital CEO
- Gordon Chang , "The Coming Collapse of China" Author

BIGGEST MAFIA BUST IN NY HISTORY; RED CHINA RISING…GIULIANI 2012 WHITE HOUSE RUN?

-Rudy Giuliani , (R) Former Presidential Candidate; Giuliani Partners Chairman & CEO; former New York City Mayor

TUNISIA IN TURMOIL
- Richard Engel from NBC News will join us from Tunis, Tunisia.

Please join us at 7pm ET on CNBC.

Wednesday, January 19, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: IS CHINA A GOOD INVESTMENT? IS THE CHINA GROWTH STORY THAT MIRACULOUS? INFLATION RISING IN EMERGING MARKETS...WHEN IS THE VIRUS COMING HERE? WHAT'S THE BETTER INFLATION BET? PLUS, BIG BANK EARNINGS



- Jim LaCamp, Macroportfolio Advisors Portfolio Manager & Advisor
- Jack Bouroudjian, IndexFuturesGroup.com CEO, CNBC Market Analyst
- Russ Koesterich, BlackRock iShares Group Global Chief Investment Strategist

WASHINGTON TO WALL STREET...HEALTHCARE & BUDGET
- Rep. Paul Ryan, House Ways & Means Cmte. & Ranking Member of Budget Cmte

RED CHINA RISING…HU AT THE WHITE HOUSE… U.S./CHINA REACH $45B EXPORT DEAL

- CNBC chief Washington correspondent John Harwood reports from the White House.

- Adm. Joseph Prueher; U.S. Navy (Ret.)
- Donald Trump, Trump Organization Chairman & President

CALIFORNIA IN CRISIS…JERRY BROWN WANTS REDEVELOPMENT MONEY BACK

CNBC’s Jane Wells reports.

DISMANTLING OBAMACARE

- Igor Volsky of the Center for American Progress; Health Care Research/Blogger
- Betsy McCaughey, Fmr NY Lieutenant Governor (1995-1999); Hudson Institute Health Policy Expert

Please join us at 7pm ET on CNBC.

How to Combat an Arrogant China?

Is there a new Cold War developing between China and the United States? That’s a question hovering over President Hu Jintao and his entourage as they come to Washington to discuss military, trade, and financial flash points with the Obama administration.

President Hu told the Wall Street Journal that “we should abandon the zero-sum Cold War mentality.” But is he to be believed?

Everyone agrees that this is a new, muscular, and more aggressive China. The more the Chinese strengthen economically, the more rambunctious they become with their foreign policy. Americans are increasingly irritated by this arrogance.

Just last week — and just as the Pentagon plans to cut back on the modernized F-22 stealth fighter — China insulted Defense Secretary Robert Gates by test-flying its own J-20 stealth bomber during his visit. Admiral Mike Mullen, head of the Joint Chiefs of Staff, wondered out loud why China is boosting its high-tech weaponry. He said, “Many of these capabilities seem to be focused very specifically on the United States.”

Surely the J-20 flight was a snub to Washington. Surely China’s whole military buildup is aimed directly at us. And surely China is of no particular help when it comes to the nuclear operations of North Korea and Iran.

Then, of course, are the numerous trade violations being committed by China. Commerce Secretary Gary Locke wants a level playing field on trade. As a strong free-trader myself, I recognize the many benefits free and open trade offers both China and the United States. But like many others, my free-trade patience with China is wearing thin.

They’re stealing our technology, violating all sorts of patent-protection laws, hacking into Google, and infringing on intellectual-property rights. In fact, 80 percent of Chinese software is reportedly pirated from American companies.

A new Chinese requirement for joint ventures with the U.S. — where China gets 51 percent, and our companies only 49 percent — looks like another attempt to snake our technology. Chinese local-content prescriptions prevent our firms from doing business with China’s state and local governments. The China curb on rare-earth materials, important both for U.S. technology and defense security, is yet another free-trade violation.

Everyone wants cooperation rather than confrontation. Creating trade barriers for Chinese exports would damage American consumers and businesses, each of whom enjoy access to decent quality, low-cost Chinese goods. But if China continues to violate World Trade Organization rules, something has to be done.

On the financial side, the great yuan debate goes on. I have never believed the yuan value should be linked to the U.S.-China trade deficit. Two-way trade is exploding. That’s good for growth. However, Treasury Sectary Tim Geithner’s new angle on the China inflation bubble has merit.

In order to hold down the yuan, China’s foreign-exchange reserves jumped another $200 billion in the fourth quarter of 2010. Those reserves now total $2.85 trillion. With these massive foreign-reserve purchases, China’s money supply is growing by 20 percent. Its inflation rate is rising above 5 percent.

Surely, if the Fed were not printing so many excess dollars — which circulate to China — the Chinese money-supply problem wouldn’t be so great. Nevertheless, holding back the yuan is creating what looks suspiciously like a big asset bubble. When that bubble is finally punctured, it could do great damage to the economies of China, the U.S., and the rest of the world.

Both the Chinese yuan and the U.S. dollar have depreciated substantially relative to gold. That tells me each currency is way undervalued because money is too loose in both countries. As Prof. Robert Mundell has counseled, U.S.-China currency stability is greatly to be desired. However, that desire can only be accommodated with a high degree of currency- and monetary-policy cooperation — of a sort that is nowhere on the radar screen. Why not look to a gold reference point for both currencies?

At the end of the day, the best thing the U.S. can do to protect its own interests with respect to China is to adopt Ronald Reagan’s strategy toward the Soviet Union. The Gipper knew that maximum security abroad requires maximum economic growth at home. That’s why the new Republican Congress, hopefully doing business with a more centrist Obama, must follow through on its pledge to reduce spending, lower the corporate tax rate, and roll back unnecessary regulations.

China has gotten cocky because it is growing at 10 percent while our unemployment rate is close to 10 percent. But greater economic strength at home will give the U.S. more leverage to deal with China on all fronts.

This was Reagan’s great lesson.

Tuesday, January 18, 2011

Stocks Say We're Healing; Prices Say Look Out

U.S. economic recovery continues to look better, according to the stock market and a boatload of economic stats last week. Stocks jumped 133 points on the Dow, which hit a 30-month high following its seventh straight weekly rise. Early fourth-quarter profit reports from Alcoa, Intel, and JPMorgan all beat expectations. Share prices are back to June 2008 levels, before the financial meltdown.

Interesting factoid: The mid-cap S&P 400 is now a half percent above the October 9, 2007, all-time stock market peak. Small-cap indexes are about 4 percent below that peak. The NASDAQ is just 2 percent below that peak, while the S&P 500 and the Dow are 17 percent below. I note this because what seemed to be unattainable now looks to be more attainable.

Stocks are a pretty good leading indicator of the economy. A message here is that we are healing.

Last week’s flurry of economic reports send the same message. The index of industrial production continues to rise, and is now 6 percent above year-ago levels. While we’re not getting any help from the housing sector, one positive surprise in this new recovery cycle is that manufacturing is leading the way. That’s good. People are still making things -- including, by the way, business equipment. That sector is up 17 percent from year-ago, showing that profitable businesses are putting money to work in the supply side of the economy.

On the demand side, retail sales continue to rise, and are 8 percent above year-ago. And total sales throughout the economy -- retail and wholesale -- are running 8.5 percent above year-ago. Inventory-to-sales ratios are very low.

The glitches? Early inflation pressures continue. The producer price index jumped over 1 percent in December and is 4 percent above year-ago. Where’s Ben Bernanke’s deflation? Energy and food prices are soaring. The CRB food commodity index is up 35 percent over the past year. Crude oil is drifting toward $100. Raw industrials are up near 20 percent. Energy-price increases are spilling over into the CPI, with gasoline nearly 14 percent above December 2009.

Inflation is a tax on the economy: a tax on business profits and a tax on consumer incomes. This could be the biggest surprise of the new year. Far too much Fed pump priming and a shaky dollar could undermine the recovering economy.

Friday, January 14, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: GOLD SINKS, COMMODITIES CORRECTION; GREECE; MUNIs A GOOD BUYING OPPORTUNITY? JPMORGAN PROFIT RISES 47%, BEATS ESTIMATES; MID CAPS ON THE MOVE




- Joe Battipaglia, Stifel Nicolaus Market Strategist
- Dan Fitzpatrick, StockMarketMentor.com Pres. & CEO; Sr. Contributor, RealMoney.com
- Michael Purves, BGC Financial Chief market strategist

B-P DEAL WITH RUSSIA'S STATE CONTROLLED ROSNET SPARKS OUTRAGE OVER RUSSIA'S GLOBAL OIL AMBITIONS

- Rep. Michael Burgess, MD, House Energy & Commerce Cmte.(R) Texas
- John Hofmeister, Citizens for Affordable Energy Founder and CEO; Fmr. President & CEO Of U.S. Operations, Shell Oil Co.

GEITHNER MEETS THE CFOs

- CNBC chief Washington correspondent John Harwood reports from Washington.

RED CHINA RISING: CRITICAL JUNCTURE BETWEEN CHINA & U.S.

- Col. Jack Jacobs, U.S. Army; NBC National Security Analyst, Fmr. Managing Director of Bankers Trust
- Erin Ennis, U.S.-China Business Council Vice President

FREE MARKET FRIDAY

1) Consumer Confidence // prices at the pump
2) Internet bubble? Lessons learned from Groupon
3) Money Mgr. arrested over Threats to Kill U.S. Officials
4) State bailouts & Unions

- Dolly Lenz, Vice Chairman Prudential Douglas Elliman
- Brett Arends, Columnist The Wall Street Journal
- Keith Boykin,Former Clinton White House Aide; Editor of The Daily Voice online news site; CNBC contributor

Please join us at 7pm ET on CNBC.

Thursday, January 13, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: INTEL AFTER THE BELL…IS TECH HEADING HIGHER?…PLUS IS BEN BERNANKE THE FORCE BEHIND THE STOCK SURGE?




- Jeff Kleintop, LPL Financial Chief Market Strategist
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Ted Parrish, Co-Portfolio Manager Henssler Equity Fund

OIL REGULATIONS HURTING AMERICA: $100 OIL AROUND THE CORNER...ROLL BACK THE REGS!

- Sen. David Vitter - (R) Louisiana
- Rep. Jay Inslee (D) Washington, House Energy & Commerce Cmte.; Co-chair & founder of the Sustainable Energy & Environment Coalition

HOW TO LEVEL THE PLAYING FIELD WITH CHINA...IS CHINA ENEMY #1?

- David Rothkopf, Garten-Rothkopf CEO, Deputy Undersecretary of Commerce for Int'l Trade Policy Devel
- Scott Paul, Alliance for American Manufacturing Executive Director

THE FORECLOSURE DUMP

- CNBC’s Diana Olick reports.

ARE HOME PRICES GOING DOWN ANOTHER 20%?

- Brian Wesbury, First Trust Advisors Chief Economist
- Gary Shilling, A. Gary Shilling & Co. President

Please join us at 7pm ET on CNBC.

Tuesday, January 11, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS: STOCKS SOAR ON PORTGUAL BOND SALE; BIG BUCK BANKS; EYE ON TECH; SMALL CAPS BOOMING





- Lee Munson, Portfolio Asset Management Chief Investment Officer
- Harry Rady, CEO and portfolio manager at Rady Asset Management
- Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer

WORLD INFLATION SCARE

- David Malpass, President, Encima Global; Deputy Asst Secy of Treasury under Reagan '86-'89
- Russ Koesterich, Head of Investment Strategy Barclays Global Investors

ALASKA PIPELINE UPDATE
- CNBC’s Scott Cohn reports from Fairbanks, Alaska.

CHINA TENSIONS ON THE RISE…NEW CHINESE ARMS AIMED AT U.S….ARE THEY GOING TO BUY US OR BURY US OR BOTH?

- CNBC’s Eamon Javers reports.

- Dan Goure, Lexington Institute Vice President; Fmr. Pentagon Official
- David Goldman, Senior Editor First Things Magazine; Fmr. Wall St. Economist: Bear Stearns & Credit Suisse

STATES OF PAIN: IS BANKRUPTCY BETTER THAN TAX HIKES?

- Mark Levine, Democratic Policy Analyst, Syndicated Radio Host
- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author

Please join us at 7pm ET on CNBC.

Saving Social Security with Personal Retirement Accounts

Take a few minutes to watch this new video from my old friend and frequent Kudlow Report guest Dan Mitchell regarding two crises facing Social Security.

First, the program has a gigantic unfunded liability, largely thanks to demographics.

Second, the program is a very bad deal for younger workers, making them pay record amounts of tax in exchange for comparatively meager benefits. This video explains how personal accounts can solve both problems, and also notes that nations as varied as Australia, Chile, Sweden, and Hong Kong have implemented this pro-growth reform.

Friday, January 7, 2011

Good Daley News

President Obama marks another milestone in his post-election move to the center by appointing pro-business Democrat William E. Daley to the powerful post of White House chief of staff. If there are any doubts that Obama wants to repair his business-bashing image, this should dispel them. It’s an excellent appointment.

Daley, a former Clinton Commerce secretary, is presently the head of Midwest operations for JPMorgan Chase and is the former president of the phone company SBC Communications Inc. Daley is a center-right Democrat. He opposed two of Obama’s biggest initiatives, the Dodd-Frank financial reform, which he lobbied against, and Obamacare health reform. He also is a free trader, working hard during the Clinton years to pass NAFTA.

Active in many business groups, Daley is a sure shot to promote an overhaul of the corporate tax code to slash the top marginal rate and broaden the base by eliminating unnecessary credits and deductions.

As part of the new Clinton group taking over the Obama White House, he surely will expedite the next round of across-the-board budget cutting, which, along with business tax reform, will be a key issue on the agenda. It’s even possible that he will accommodate some kind of deal to revise Obamacare as the GOP makes its important push to overturn it.

As chief of staff, Daley also will handle many of the presidential-campaign reelection priorities. Unfortunately, Mr. Daley was at one time a lobbyist with Fannie Mae. However, the left-wing blogosphere is already attacking him. That’s a positive credential.

So I continue to believe that both ends of Pennsylvania Avenue -- the new GOP House, the more influential GOP senators, and the new Obama 2.0 Clintonian White House -- will gradually move toward pro-growth policies. It won’t always be smooth. It ain’t gonna be perfect. There are some huge rough-and-tumble battles ahead. But there are new signs that the supply-side incentive-growth model is making a comeback in Washington, D.C. Trust but verify.

Wednesday, January 5, 2011

Washington Goes Supply-Side

‘Stop the bad stuff” is what John Boehner told a bunch of us at breakfast a few weeks before the election. That’s how he defined the GOP mission. Now he’s Speaker.

And now there’s an opportunity for both ends of Pennsylvania Avenue to move in the direction of a supply-side economic growth model to reduce chronic unemployment and really get the economy moving again.

You can’t govern from the House alone. Boehner knows that. But he also knows that you can stop the redistribution, the big spending, the overregulation, the tax hikes, and the war against business and investors.

The economy is picking up this new political vibe. Economic growth has shifted to 4 percent from 2 percent (even though the Fed hardly acknowledges this). And just in the last six weeks, indicators of better jobs and business confidence have been springing up everywhere.

The economic upturn probably started late last summer, but it has picked up steam since the elections. Car sales, ISMs, small-business confidence, 297,000 ADP private jobs, and brisk holiday retail sales — the indicators all look good.

And what’s helping light things up? Low-tax-rate clarity. Stopping the pork-barrel, earmarked, omnibus spending bill. And now the potential undermining of Obamacare. Plus, the hope for broad-based spending limits, and even a corporate tax cut touted by Obama and hopefully the new House Republicans. Trust but verify. And right now I’m willing to trust.

If Obamanomics has been replaced by Tea Party Reaganomics 2.0, the revived Gipper approach is at heart an economic growth message — operating through free-markets, not government. And it’s not simply budget bean-counting either.

Cut-and-grow seems to be the new House GOP mantra. And that’s fine, as long as the cut part includes corporate tax cuts to grow the economy and complement the hoped-for spending cuts. Growth is essential to the GOP political future, as well as the nation’s health and wealth.

Over at the other end of Pennsylvania Avenue, Barack Obama won’t be the first liberal to move in the direction of supply-side growth incentives, especially lower tax rates. Think John F. Kennedy and Bill Clinton. Then and now, the motives are undoubtedly political. Fine. It’s the results that count.

Just today, the White House announced that Obama will speak before the Chamber of Commerce in order to improve relations with business. This is good. Next thing you know he’ll be speaking at a Tea Party event.

And it looks like the president is Clintonizing his White House staff. He’s probably bringing in businessman and former Clinton Commerce secretary Bill Daley to be chief of staff. And he might pick former Clinton economic chief Gene Sperling to replace Larry Summers.

Bill Clinton was a liberal who got mugged in the midterm elections, and he changed his stripes on the economy and taxes. And now we may be seeing Obama make the same transformation. But I repeat my own mantra: trust but verify.

And there’s no smooth sailing ahead for the GOP. They’ll have to fight tooth and nail over the EPA carbon assault and the Obamacare health takeover if they’re to stop these monumental economy and job killers.

But stocks and the dollar are rising, and gold is falling. These markets are affirming the shift in politics and policy. We are moving toward the supply-side. That’s good. Haven’t been there in a while.

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

MARKETS…THE NEW CONGRESS; ADP; ISM; DOLLAR; GOLD; COMMODITIES; FINANCIALS - THE GROWTH TRADE

- Jerry Bowyer, CNBC Contributor/Syndicated Columnist - Pittsburgh
- David Goldman, Senior Editor First Things Magazine; Fmr. Wall St. Economist: Bear Stearns & Credit Suisse
- Robert Froehlich, The Hartford, Sr. Managing Director


WORLD FOOD INFLATION FEARS

- Andre Julian, Senior Market Strategist at OpVest
- David Goldman, Senior Editor First Things Magazine; Fmr. Wall St. Economist: Bear Stearns & Credit Suisse
- Robert Froehlich, The Hartford, Sr. Managing Director

EYE ON THE NEW CONGRESS

Rep. Jeb Hensarling, (R) Texas; New House Republican Conference Chairman

NEW CONGRESS LED BY SUPPLY-SIDER PRESIDENT OBAMA?

- Howard Dean, Fmr. Vt Governor & Presidential Candidate; "Howard Dean's Prescription for Real Health Care Reform" Author; CNBC Contributor
- Steve Forbes, Forbes Chairman & Editor-In-Chief Forbes Media; Fmr. Presidential Candidate; "How Capitalism Will Save Us" Co-Author

S.E.C. VS. FACEBOOK & GOLDMAN SACHS?

- Andrew Ross Sorkin, The New York Times Deal Book Editor; NYTimes Chief Mergers & Acquisitions Reporter; "Too Big to Fail" Author
- James Altucher, Formula Capital Managing Director

Please join us at 7pm ET on CNBC.

Tuesday, January 4, 2011

On CNBC's Kudlow Report Tonight

On CNBC's Kudlow Report tonight:

COMMODITIES TAKE A BIG TUMBLE: HOW TO PLAY IT

- Lee Munson, Portfolio Asset Management Chief Investment Officer
- Joe Battipaglia, Stifel Nicolaus Market Strategist
- Rich Ilczyszyn, Lind-Waldock Senior Market Strategist

QE3 ON THE HORIZON? THE FATE OF KING DOLLAR

- Dan Greenhaus, Chief Economic Strategist Miller Tabak + Co
- Michael Pento, Euro Pacific Capital Senior economist

HAS OBAMA MADE THE PRO-BIZ LEAP? or....IS HE BLOWING SMOKE?

- Robert Reich, Fmr. Labor Secretary; "Aftershock: The Next Economy and America's Future" author; CNBC Contributor; Univ. of CA., Berkeley
- Andy Busch, BMO Capital Markets Global Currency & Public Policy Strategist; CNBC Contributor; World Event Trading Author


2011 ECONOMY CHECK LIST

STRENGTHS:
- EASY MONEY
- LOW TAX RATES
- HIGH PROFITS

RISKS:
- SOARING OIL
- DOLLAR COLLAPSE
- EURO DEBT COLLAPSE

STRAINED STATES PUT UNION POWER & PAY IN PLAY

- Matt Miller, Washington Post Online Columnist; Public Radio's "Left, Right and Center" Host
- Josh Barro, Manhattan Institute senior fellow

Please join us at 7pm ET on CNBC.

Monday, January 3, 2011

Supply-Side Obama?

The past is not always a prologue to the future. But looking at some of the big winners and losers of 2010 does provide some strong hints of a positive 2011.

The biggest winner last year was the Tea Party, which shellacked President Obama in the election. Mr. Obama becomes the biggest loser. And the economy and stock market will be the beneficiaries.

The elections were the first major step toward restoring free-market capitalism and rolling back big-government controls, planning, and spending. This is a money-politics issue. Stocks roared 20 percent during the second half of last year, as markets sniffed out the huge political change. Post-election, stocks also had a big move, finishing the year at better than two-year highs — going all the way back to pre-Lehman Brothers.

Sure, there were important economic factors involved. Europe didn’t fall apart. The dollar didn’t collapse. And better U.S. economic numbers started coming in. (Double-dip bears also were big losers last year.) But rising political confidence helped, too.

The emergence of Tea Party free-market populism — what I call Reaganomics 2.0 — is hugely bullish for stocks and the economy in 2011. Recall that in mid-December the Bush tax rates were extended and the earmarked omnibus-spending monstrosity was withdrawn. These were bullish events for producers and investors that may have pulled the curtain down on Obamanomics.

And now it’s fascinating to watch the money-politics dynamic continue. On a recent Sunday talk show, top Obama economic advisor Austan Goolsbee sounded like a Reagan disciple. “You’ve got direct incentives for companies to invest in the country,” he said. And he went on to describe a new Obama economic model that sounds suspiciously supply-side: “The focus has got to be on investment, on exports, and on innovation. . . . The president is firmly in that — planted in that camp — and we are going to grow our way out of this.” (Hat tip to economist Don Luskin.)

As noted, Obama agreed to freezing top marginal tax rates on all personal incomes and on capital-gains and dividend investment. But now there’s major talk that the Obama budget will include a sizable corporate tax cut in return for ending unnecessary loopholes and deductions. Business has been clamoring for this. Hopefully it will include a territorial tax provision to end the double tax on foreign earnings. Equally important, the100 percent business-expensing provision of the recent tax compromise might be made permanent.

Reagan couldn’t have said it any better. Surging business investment from a lower tax cost of capital and higher investment returns is a surefire job creator.

Of course, as the Gipper also would say, trust but verify: We’ll have to see the fine print of any such Obama proposal. Crucially, corporate tax reform must be revenue neutral, not a tax hike. But at this moment I am willing to trust the U-turn of Team Obama toward an incentive model of growth.

And there are plenty of stories coming out of Washington about Obama reading Ronald Reagan biographies, which presumably include the pro-growth tax reform of 1986 and surely mention that Reagan himself was a student of the John Kennedy tax reforms that slashed tax rates across-the-board.

The point is, if Team Obama is moving towards an entrepreneurial incentive model of growth, and away from the false consumption model of big-government spending, it’s very good news. Already we have seen a new free-trade initiative. And there’s even talk of broad-based, personal-income tax-rate flattening that could be part of a big-bang tax-reform package.

And the congressional momentum is decidedly toward lower spending. Without question there’s going to be a huge budget-cutting exercise led by Paul Ryan in the House and Jeff Sessions in the Senate. Sen. Jim DeMint wants a showdown over the debt ceiling in order to force some kind of balanced-budget amendment. And Sen. Bob Corker has taken the bit in order to build a bipartisan group to make sure that Republicans a spending cap in exchange for raising the debt ceiling.

Keynesians do not understand the pro-growth benefits of lower government spending. But any time government resource absorption is reduced, potential investment for the private sector is unleashed.

Yes, once again, we must trust but verify. And there are going to be huge battles ahead over Obamacare and EPA regulation, both of which are anti-growth. But for starters in the new year, carrying over from the November elections, at least fiscal policy appears to be moving in a positive pro-growth direction.

No wonder stocks rallied almost 100 points in the first 2011 trading day. The Gipper must be smiling about all this.

On Tonight's Kudlow Report

On CNBC's Kudlow Report tonight:

BIG NEWS OUT OF WASHINGTON…IS OBAMACARE IN THE GOP CROSSHAIRS? PLUS...NEW WHITE HOUSE BLOOD? CHICAGO’S BILL DALEY IN LINE FOR TOP SPOT – IS OBAMA SEEKING BUSINESS ADVISORS?


NBC’s Steve Handelsman joins us with a report from Washington.

MARKETS KICK OFF NEW YEAR WITH A BANG

- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Vince Farrell, CNBC Contributor/Soleil Securities Chief Investment Officer
- Jack Ablin, Harris Private Bank Executive VP & Chief Investment Officer

THE NEW CONGRESS -- TOP OF THE AGENDA
- Sen. Bob Corker (R-TN) will join us with perspective.

IS FACEBOOK REALLY WORTH $50 BILLION?
- Bruce Upbin, Forbes Magazine Managing Editor

THREE CHALLENGES TO THE ECONOMY GROWING IN 2011

- Chrystia Freeland, ThomsonReuters Global Editor at Large
- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author

Please join us at 7pm ET on CNBC.