About homeownership. And by the way, folks, stop scapegoating the rich. A new study shows that when the rich get richer, so does everybody else in society. The economic pie grows larger and we have an expert who can prove it. President obama offered republicans a new economic grand bargain of sorts today, promised to back Corporate Tax reforms in exchange for new spending on jobs and infrastructure programs. Gop leaders say its a nonstarter. Eam eamon joins us now. Good evening. The president went to chattanooga, tennessee, to tour the facility and lay out his ideas on where the United States economy should go in the coming years, and what he said was proposing a grand bargain here in terms of reforming the tax code and increasing spending on Infrastructure Projects that he thinks will stimulate the economy. Heres the president earlier today. Heres the bottom line. Im willing to work with republicans on reforming our Corporate Tax code, as long as we use the money from transitioning to a simpler tax system for a significant investment in creating middle class jobs. Thats the deal. But even before the president spoke in tennessee today, republicans had already dismissed this as not so grand and not so much of a bargain. Heres republican leader mitch mcconnell. Its just a further left version of a widely panned plan he already proposed two years ago. This time, with extra goodies for tax and liberals. The republicans on the hill already say theyre not interested. This puts the president politically in the spot of being the guy who lays out an alternative for what to do with the economy and create jobs. He forces the republicans to be the bad guys rejecting a proposal. Politically, the white house thinks this puts the president in sort of the reachable man position. The guy whos trying to do something. Then he can blame washington gridlock for the problems. Obviously nobody in washington thinks theres all that much going to come out of this particular proposal, but thats the politics of the situation, whether we get any policy out of it remains to be seen. Larry, back to you. All right, many thanks to eamon javers. So look, are we finally seeing a real progrowth Corporate Tax cut from the president . I cant figure it out yet, because this plan is going to raise billions of dollars of revenues to finance the president s spending projects instead of lower and lower tax rate reduction. That troubles me. How are they going to treat Small Business owners . How will they retreat the repatriation of foreign capital . Id like to believe this is supply side progrowth tax reform, but gee, im not so sure. Its so complicated. Weve got to talk about this this evening. We have former romneyryan Campaign Policy adviser lonny chen. And dan clifton, head of policy research at strategus. In the fact sheet, the top tax rate for corporations goes from 35 to 28 . But there are so many exceptions and theres no fleshing out how theyre going to. And i do know that theres so much money left over for spending programs that it doesnt look like a tax cut. Can you just tell me what this is all about . Well, larry, thanks for having me on tonight. I think this is a very confused proposal, as youve said. Its not clear, first of all, that its revenue neutral. It seems like the president is looking to raise revenue here and hes using it for more spending. I think if theres one thing that weve learned over the last few years is that spending doesnt create jobs. Progrowth tax reform and progrowth policies are the things that will create jobs. All right. Let me go to dan clifton. How do you read this . Of course, he says in here and he said in his speech, theres a onetime transition from what we have now to Corporate Tax reform, and the revenues from that onetime transition are going to you know, his favorite list of infrastructure and whatever it is, 45 Manufacturing Institute and wind and solar and all that good stuff. Okay, thats his one time. I dont know what that means. A onetime transition. I have no clue. Youve got to help me on this. Let me explain this to you. To get the corporate rate from 35 to 28, we would need 700 billion of tax revenue over ten years. So the president s saying that he will do that. And then hes going further and saying he wants more money to spend. That means theres probably about a trillion dollars in tax increases offset by 700 billion of tax where are these tax increases coming from . They threw out accelerated depreciation. That can get you about 400 billion dollars over ten years. But heres the kicker, larry. The talk this morning was about possibly being repatriation. By the afternoon, it was a tax on u. S. Multinational foreign profits that are overseas, so its not a repatriation. If you have cash overseas, well apply that tax to you. Its like an alternative minimum tax for international profit. Thats the way i read it. That is totally the way i read it. It is not territorial. Theyre going to penalize the money overseas. And finally, i just want to ask you, in terms of this thing, what about the harry reid argument . I dont know, a couple days ago, harry reid pops up and says oh by the way, democrats want to raise about a trillion dollars because they want to get rid of the sequester. Before we get to mike, they want to raise a trillion dollars of additional taxes on individuals because they dont want this sequester. So it looks like weve got whatever, a net increase of, what did you say . 700 billion in corporate revenues and a trillion dollars in individual revenues . These are not fax refotax refore are not tax cuts. Clearly, the reason why democrats need revenue is because sequestration needs to be replaced. Tomorrow were going to get the gdp report, Government Spending as a percentage of gdp has come down significantly. Theyre going to blame the sequester and this positions the president to say the republicans are for austerity and hurting gdp growth. Mark my words, thats going to be the debate tomorrow morning. Mike, what is your take . Are you for Corporate Tax reform at all . As i remember, you want to raise taxes on corporations, dont you . I wish this was a big Corporate Tax increase, but unfortunately, its not. Its revenue neutral in the long run. Youre right that it would generate some revenue in the short run, but its not through a kind of runtime tax. Its because when you transition from some of these tax rates that we have now and away from those, they will generate a onetime windfall at the front. Use that money and invest in things that we need to invest in, rebuilding bridges and roads. I wouldnt mind seeing more revenue coming in from the corporate sector but that doesnt seem to be in the cards right now and its not what the president proposed and its really not appropriate to say that this is a big tax increase when it just absolutely is not. I cant just figure it out. Do you believe the 28 marginal rate . Thats in the president s talking point. Hes got a fact sheet. He does mention 28 . The current rate is 38 . Id like it to go to 25 or 20. Hell, id like to abolish the Corporate Tax altogether, to be honest with you. But the point im asking, is it reliable . Is the 28 a real number after this transition and spending and all the rigamarole . I think it could be. The question is going to be how is the base going to be broadened . Where is the pain going to be to get to that 28 . I think thats the question. Even at 28 , were still left with one of the higher Corporate Tax rates in the industrialized world. And as you said, weve got to get lower, probably closer to 20 or 25. Ultimately, im not sure that this is a real proposal for tax reform. Thats something that bipartisan negotiators have been working on. Is the president interested in individual tax reform. Weve got to have reform of both if were going to grow this economy. Thats a very important point. Because the treatment of Small Business owners, the tax treatment of Small Business owners, they could be left to 39. 6 while companies could be down to 28 . You know as well as i do, and weve had this debate before, there are almost no actual Small Business owners who make that kind of money to be in the top bracket. I mean, i dont want to go back through this, but you know theres only about 2 of all Small Businesses that 45 is a red herring. Yeah, but its a rich red herring because they make about 45 of the income, michael. They are its 2 of the Small Businesses. Youre trying to use Small Businesses as a way to cut tax rates for very wealthy people. And i think we had that debate over and over again and im pretty sure which side won that one. I think it worked out great. By the way, we got a cornell professor in the next segment whos going to tell you just how well those top marginal tax rates were. Tell that to george bush. Let me go back to the bush tax cuts had their place. The president made it clear that he does not want the sequester. He also made it clear they dont want the budget caps either, going back to 2011. And therefore, theyve got to fill in that gap with some kind of if they got it, which they wont. If they did get the end of the sequester, thats another revenue increase. So how do the politics of this policy play out . Well, its very interesting. Were creating 200,000 jobs a month while were cutting Government Spending. I think on friday, youll hear that we can cut spending and continue to grow this economy. That being said, look what the president wants to spend money on. He wants to spend money on highways. We looked at his highway proposal, spent about 10 billion a year. You have one project in this country that will be 9 billion of new investments. On the private side of the economy, requires no taxpayer dollars. Thats the Keystone Pipeline and he seems to be rejecting that today. So there are other ways that we can get that infrastructure funding, particularly since we have all this energy out there. And we can cut taxes. This is the best of both worlds. Do you think that were going to have to repair our roads and bridges at some point . Do you think were going to have to at some point decide that well have to compete with china on infrastructure and 21st century infrastructure . Lets look at the facts here. In 2009, we did a massive stimulus. We spent 7 billion to turn the economy around. On road paving. We turned the economy around. Im not going to argue with you about the effectiveness of the 2009 stimulus. But we paved roads. Are we going to create productivity for u. S. Workers or pave roads . Hang on, michael. Youre still in a 2 economy. Still the slowest recovery since world war ii. Absolutely. You start cutting spending. You cant have it both ways, though, larry. I want to go back to dans earlier point with the cpo. Obama today says that they have to get rid of the meat cleaver sequester, because the cbo says it will lose 750,000 jobs this year. Now, the year is half over. Were going to get july on friday. Were averaging 200,000 increase in jobs. So can we say now that the cbo is wrong . Can we say now that the sequester and actually budget cutting may have freed up and liberated the private economy and lowered the governments budget burden and that therefore its something of a tax cut and we should keep the sequester . Can we begin to say that the cbo is wrong and lower spending is progrowth . Well, absolutely, larry. And let me tell you this, that weve created 5 trillion of wealth this year. That is offsetting any drag that youre getting from a 45 billion of cuts and sequester this fiscal year. So the economy is dynamic. The second point that ill make on this, larry, is really the fact that some of these models prove to be wrong on the way in, and now on the way out. They projected the stimulus would create all these jobs. Theyre projecting that theyre going to lose all these jobs, theyre not. The dynamic of the american economy. I love how in one breath, you decry the 2 growth weve had and in the next breath, you say its helping grow the economy. We would have 750,000 more jobs this year if it werent for sequester. The sequester cuts went into place, the budget cuts and the sequester cuts just went into place. Thats not true at all. Its not true at all. T the sequester started in 2013. Wed probably have a better economy. The cutting started in 2011. Look at the united kingdom. They started cutting spending and their economy has been flat. Its been flat for the last three years. Anyway, ive got to get out of here. Thank you, gentlemen. Im not sure were any further along on tax reform than we were at the start of the segment, but im sure we will learn more as the days pass. Now, next subject. Who says we cant have more people getting rich in america . President obama and the income inequality crowd seems to think rich people make everybody else poor. That is balderdash. Were about to bring in an Ivy League Professor no less who says when the rich get richer, so does everyone else. And later on, our buddy ryan surhan from milliondollar listing is going to join us live to talk about declining homeownership in america. Is it such a bad thing after all . And dont forget, folks. Free market capitalism is the best path to prosperity. I want to cee loer Corporate Tax rates. Absolutely. I want to see it made permanent. But i dont want more spending. Im kudlow. Well be right back. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. Ive been saying it for years. When you expand fracking in the u. S. , not only do you unleash a huge economic boom, you lower our dependence on foreign oil, too. Lets go over to sima for more on this. The prince is worried about just that, he says increased production would hurt saudi arabias economy. Right now, saudi arabia is pumping at less than full capacity. And it does rely on oil for nearly all of its economic budgets. Hes right. Hes deadright. Hes got problems. They dont own the World Oil Market anymore. And to see how this will impact the u. S. Oil market, he doesnt invest in any stocks here, including citigroup, apple, time warner cable. So it will be interesting to see what happens. You think he might pull out . Who knows . Well see what kind of impact. Hes better off buying American Companies than saudi oil. Think about that. All right. Well leave it there. Now, folks, you hear it all the time. The rich are getting richer and therefore the poor are getting poorer. But it is not true. A new study focused on 30 years before the 2007 recession shows that while the rich were indeed getting richer, so was everybody else. All right, were going to do this as a phoner. Joining us on the phone now is richard burkhowser. Welcome. Im sorry we have to do it by phone. Next time on tv. Just tell me, for 30 years, youre arguing yeah, the rich got richer, but so did all the middle class people and the working class people and the lower class people. Now, why doesnt anybody get that . The reason is that most of the work has been by people who have looked at taxbased data. The main people of the government. And what theyre focusing on is Market Income from wages and dividends and those sorts of things. Theres no question that Market Income has become more unequal. When you look only at that, the bottom 20 of the populations income fell by 33 , so the poor got poorer, the middle class only increased by 2. 2 . So it appears the rich got richer, the poor got poorer and the middle class are stagnant. But that is not let me just ask you. I have your op ed piece. We have a chart on the screen. Youre saying look, youve got to use all these Social Security benefits and year end income tax credit, health benefits, medicare, medicaid. Youve got to also account for the fact that a lot of unmarry d ed singles live together in the same household. In other words, their measurements are wrong and when those measurements are corrected, you get an entirely different picture. Thats exactly right. And what we see is that certainly that money doesnt come from no place. The government gets its money by taxing Market Income and prov e providing the people with less Market Income. So once you take that major redistribution into account, then the bottom 20 falling by 33 since 1979, they actually increase by 31 . The middle class, instead of stagnating, they increase by 34 . Its seasonally true that the top income groups increase by 54 . But that growth that occurred in the market is what allowed both the rich to become richer and the middle class to become better off. I mean, can one say under this long period where the top marginal tax rate was basically reduced, basically reduced. That in effect the very rich helped finance the economic and income improvement of everybody else . Can you say that . Yeah. I dont think theres any question about that. They show a dramatic increase in top incomes, but its because there was a dramatic increase in the Economic Growth. When the economy is growing, everybodys better off. And the key to Economic Growth is, of course, that you keep tax rates low. So why is everybody scapegoating the rich . You hear it from certain president s, out on the campaign trail talking about inequality. The way to solve inequality is to raise taxes on the rich. Your data says that is exactly the wrong policy. I think whats going on is its a simple story that tries to have a scapegoat. So certainly since the great recession, things have gotten worse. They havent gotten rich because the rich are taking advantage of the poor and the middle class. The rich, the middle class, and the poor have all been hit by this recession. What we need is Economic Growth, and the way to do that is to have policies that focus on Economic Growth and redistribution. All right, amen. Free market capitalism on the supply side. Richard burkhauser, cornell university, thank you very much for your work. The soldier who started the massive wikileaks treason case got his verdict today. Seema has that and more coming up on kudlow. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. Its been that way since the day you met. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. 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Negotiators from both sides meeting with kerry at the state department over the past two days. Kerry says both sides are committed to the talks, which will continue sometime in august. But you know, its never easy in that part of the world. New word today that iran is close to being able to process enriched uranium into fuel for a Nuclear Weapon without detection by international inspectors. It could have that by beginning of next year, according to a Research Group studying iran. And bradley manning, acquitted of aiding the enemy, a most serious charge against him. Manning is the former army soldier who provided secret government documents to wikileaks. He was still convicted of several lesser charges including espionage and computer fraud. He could face 128 years in prison. Larry . 128 years in prison. And we still dont know about the other guy hanging out in the russian airport. Thanks very much. We are at the lowest levels of homeownership since 1995. But is that really such a bad thing . Bravos milliondollar listing star ryan surhan is back with us tonight. Were going to talk about this trend and whether its a threat or maybe something positive going on in america. Homeownership may not be for everybody. Im larry kudlow. Well be right back. Vo traveling you definitely end up meeting a lot more people but a friend under water is something completely different. I met a turtle friend today so, you dont get that very often. It seemed like it was more than happy to have us in his home. So beautiful. Avo more travel. More options. More personal. Whatever youre looking for expedia has more ways to help you find yours. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. The new blackberry q10. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. First up, lets look at some pretty good housing numbers out today. Casesheller, biggest yearly gain since march 2006. On the other hand, u. S. Homeownership slipped to its lowest level in almost 18 years. That puts it back to 94 and 95. Question, is that a bad number . Is it really worth it to always buy a home . Here now from milliondollar listing, top Real Estate Broker ryan surhan. Nest seeker. Steve warren also joins me onset. When you say go back 19 years, whats happened here is we went from a peak in 2004 of almost 70 . 70 of americans owned homes. Were down to 65 . So that aint bad. 65 turns out to be about the average for the last 35 years. Whats wrong with that . I dont think anythings wrong with that. I think its actually pretty good when you compare it on the global market. When you look at germany, has a very robust economy comparatively, it has 53 homeownership. But i think the American Dream is homeownership. The American Dream is not owning a home that you cant afford. Right. And its very, very simple. But nobody understands it. So the reason we were at 70 in 2004 was because people were getting 90 loan value, no doc loans and told the American Dream is owning a home even if they couldnt afford it. Which is just crazy. Which got us into a lot of trouble. I just made a little list. Down payments, virtually nothing. Im for 20 down payment. The Old Fashioned way. No income verification. They ignored the credit scores. Now days, by the way, did you know banks who make a mortgage, they have to keep part of that mortgage in their portfolio. They cant put it all on fannie and freddie. Now, should the government loosen up . Im hearing liberals in washington want the government to loosen up on all these criteria so we can go right back in. There is no question, by far the most important factor in determining whether a loan is going to default, a mortgage is going to default, is the skin in the game. The down payment. So youre exactly right. If we want that, even 10 down payment, you would see a dramatic reduction in the amount of foreclosures. Now, here is what worries me, larry. You asked is the government going to loosen it . I see them already doing that. Over 90 of the new mortgages have been made over the last 18 months. Over 90 carry with them fha insurance, fannie mae, or freddie mac. The taxpayer is still on the hook here. I want to say one other thing. I love homeownership. Its a great thing. You dont do anybody a service by putting them into a home they cant afford and cant pay. Do you rent . Or is all of your stuff home sales . Both. Do rentals and sales throughout manhattan. So let me ask a dumb question. Why is it back to rent . Its not. In terms of numbers, makes sense. Of course, of course. You have a lot of people over the last five years who have become very risk averse for a good reason. They can rent and save for a larger down payment to be able to get a better loan at a lower interest rate, to have lower monthly payments, which makes life much easier. You have a lot of people that are just scared of putting all of their capital into one asset that they could lose. Except now is not a bad time, in my opinion, to buy. Youve got still lower Interest Rates than any time virtually weve had in 30 years, even though theyve gone up. And prices are still pretty low. Weve seen a big decline in housing prices. So i agree with you. There are times you want to rent, but now is not such a bad time to be hiring. I agree. But we had a guy on, i asked him, he did a little work for us, over the long run, im talking many decades, which has better rate of injuries, the stock market or real estate . The answer is stock market. Of course. I think thats to your point, you put all your eggs in your home, which you can barely afford to finance. Youre in a heap of trouble. Thats why i say if homeownership stayed 65 , maybe drops a little more, but thats where its been on the barometer for the last three decades. Thats okay. Its not like the end of the world. Yeah. It blows my mind when you read these stories of people who make 60,000 a year but they own five condos in miami. Because we let them. Because we have legislation that says hey, hey, hey, no, its okay, you should be able to own five condos. Even though you cant afford it. It doesnt make any sense. That is the American Dream. It blows my mind. But as business, what are you selling now . Everything, because of you. By the way, thank you for my commission. I really appreciate that. Its okay. Comes on the show, does a great job, and then he tweets, you sale milliondollar house . No, we sold something for 3,650,000. Im still looking every single day for my commission and havent received that. I want to thank you. Youre welcome. Something a little better, i was going to create job growth, give you a spot on my team maybe in your down time. Okay. But you are selling homes now. Absolutely. And youre selling expensive homes. Its doing really well, isnt it . Were also having an increase in the firsttime buyer market. An increase in second home buyers once again. Were selling across the board. There is no slowdown, especially on the coast. Now i think were having some sub markets within the middle of the country that are starting to pick up. As you said, because Interest Rates are starting to slowly tick up because prices are slowly starting to tick up or 12 with caseshelling this year. What does everybody do when prices go up . Everyone buys. One cost of all of these government subsidies to housing, fannie, freddie, fha, is that in this country generally, we are overinvesting in housing and underinvesting in capital. By the way, im opposed to the mortgage reduction. Im opposed to it. If you have a low flat tax rate, it doesnt matter, its not worth anything. Then why do we say its better to build a home than a factory . Obama is talking about these Manufacturing Institutes but he wants to have homes, wants to have everything. Wants to spend money on everything. Cant do that. Thats not the way it works. Cant spend money on everything. I tell myself that every day. Got something cooking . I promise you have you sold larry one of those milliondollar homes yet . Thank you to steve and ryan. Be sure to catch ryan on milliondollar listing. Now, the big s. E. C. Case against the exgoldman trader wrapped up today. Now its in the hands of the jury. Weve got an update on that and more just ahead on kudlow. Welcome back to the kudlow report. Three penn state officials will stand trial for allegedly covering up sex abuse of young boys by former football coach jerry sandusky. They are former University President graham spanier, former Vice President gary schultz, and exathletic director tim curley. A judge says there is enough evidence for a trial. And remember this horrible train crash in spain last week. 79 people killed. The driver of the train was talking on the phone when the train flew off the track, according to court documents. The train was going as fast as 119 Miles Per Hour when the brakes were activated. Larry, scary situation. Absolutely incredible story. Now, closing arguments of the fcc presented this afternoon in new york. Both sides had a lot at stake. Mary thompson has been following the case. What can you tell us . Good evening to you, larry. It was an allday affair with the prosecution and defense having their final say in the fccs case against the former golden Vice President today. The s. E. C. , which accused tourre to follow the documents. They hammered away at the 43yearolds credibility by highlighting emails to and from tourre as far as marketing materials he put together. The s. E. C. Maintaining this to be critical information, tourre did not tell investors. He made a billion on the bet, while the other investors lost a billion. Now tourres team countering in its close listened to the testimony. They hammered away at the credibility of the s. E. C. s witnesses by poining out inconsistencies in their depositions and testimonies on the stand. Tourres lawyer telling the jury the french native is in court because he refused to yield to an overbearing Government Agency that overreached, ruined his career, and invaded his personal life by using emails sent to his girlfriend to bolster its case. Jury deliberations begin tomorrow. Both sides have a great deal riding on the income. Tourre, who is now a doctoral in economics, could be banned from the securities industry for life. As for the s. E. C. , it needs a viktdry in order to quiet critics who maintain the agency has been too lenient in pursuing individuals accused of wrong doing the financial crisis. Mary, thats really an attitude. That last point you made. The s. E. C. Needs a win. I guess i would add the u. S. Attorney and the Justice Department needs a win in other cases. Is that the prevailing attitude, new cops on the beat . We didnt throw anybody in jail in 2008 and 2009, but were going to make up for lost time now . Thats certainly the case with the s. E. C. , larry. A lot of people, again, have been very critical that it has been too lenient and really hasnt been able to focus on any individuals. Had a number of settlements with firms that neither admit or deny wrong doing, but again, its the individuals, the number of people who would like to see have some kind of fine or penalty against them or ban, and thats what the fs. E. C. Is goin after here. Mary thompson, appreciate it very much. Theres a new show premiering tonight on cnbc. Weaver all very excited about it. Seema has details on that. Thats right. The show is called profit. Pretty simple concept. Marcus tries to help turn struggling businesses around. On tonights episode, its car cash, which buys and sells cars. Watch this clip. Look, i dont know if you thought this was my first rodeo, but my job here is for myself and for you. I dont get it. Theyre taking this [ bleep ] margin right out of our pocket. Are you kidding . Theyre great buyers. Theyre great with people. Then hire them. Id love to hire them. Then why dont you . Because i need them to sell cars to also because they pay me a lot of money for cars. Theyre honest guys. These guys arent dishonest. Its not about being honest or dishonest. It doesnt make any sense to me. But you make your living off of selling cars and the margin between those cars. You buy a car for 10,000, you dont know what the market is. You sell it to them for 11, they sell it for 12. The only reason theyre here is because they make a spread between you and the next person. Timeout. In my world, its different. This isnt bakers field, california. This isnt dallas, texas. This isnt chicago. This is my [ bleep ] town. I know what goes on here and i know my guys. Dont tell me about my guys. They go or i go. The profits appears tonight at 10 00 p. M. Eastern right after a brandnew episode of american greed. It looks like an exciting show. I love that clip. I love the profit. I love the whole concept of it. Those guys arguing about how best to make profit. That there is capitalism. Stocks traded sideways today, as we wait on tomorrows fed statement, what do investors want to hear . Were going to take a stab at that and we have some details on a massive 250 million gift to a college you may not have even heard of. Next up on the kudlow report. One thats 80 smaller. Uses 89 less energy. And costs 77 less. Its called hp moonshot. And its giving the internet the room it needs to grow. This. Is going to be big. Its time to build a better enterprise. Together. Brad smith known for the 1921 win over harbor. Rural Kentucky Center college is making some new headlines once again tonight. Lets go back to seema for that story. The Small Liberal Arts College in rural kentucky has received one of the Biggest School endowment gifts in u. S. History, valued at 250 million. The donation comes from the Eugene Brockman charitable trust. His son served on the schools board. It may sound like a record donation, larry, get this. Its only the secondbiggest. The biggest came from new york mayor Michael Bloomberg earlier this year when he pledged 350 million to john hopkins university. Extraordinary. Good for them. Moving ahead. Stocks remain steady today. Kicking off the set of their twoday meetings. By this time tomorrow, investors may have some claret on Ben Bernankes taper strategy. Joining us, danielle hughes, ceo of divine capital. Mike ozanian, forbes executive. The best in many months. Good housing numbers, right . A pretty good energy sector. The earnings are coming in. They may not be spectacular. I just want to ask you, whats wrong with this market. Why are you youre both pessimists tonight. Ive got to hear this story. You first. Not entirely pessimistic. An equation here, right . Even some Institutional Investors look at the following equation. So bad economic numbers equals more quantitative easing, which means a better stock market. You have to put the two and two together and say to yourself well, if we taper, then why would the market do better, right . So i think that thats a big reason why theres a lot of investors on the sidelines right now, why we havent seen that great rotation. Can i just say and i know youre going to disagree. The feds tapering, meaning theyre slowed down in bond purchases, which has caused longer rates to go up. The feds tapering is in the market. Its 40 in the market. Right through probably to the end of the year. But certainly september. Thats it. Its done. I agree with you 100 , larry. Its probably why the market is trading at over 14 times. What bothers me is your point about housing. Great. Thats consumption. What about investment . Whats going to spur future growth . We saw the number was negative last year. Im concerned about employment. Most of the jobs now are parttime. Where is the income going to come from thats going to spur spending . Thats what im concerned about. Can i just pick a small fight with you . The core capital goods numbers, factory orders are up three straight months. Its a really nice run. And out of the employment report, the income numbers, hours work, hours work times earnings, i dont find it. Up almost 5 . And there aint no inflation whatsoever. So i just dont see it. Im going to flight you on the inflation. Finished goods and the pti, two and a ha 2. 5 increase. That was just because of a jump in energy prices. You know that the core pc deflator, 1 here year on year. The cpi, about 1. 5 . Ive got to give this to ben bernanke. I will apologize to him on the air. He was right. There is no inflation. Right now, the dollar listen to this. Let me come back to you. Youve got a steady dollar. The gold collapse seems to be over, so theres some stability there. Commodities a little soft because of china, but nothing really terrible. And basically, a stock market that defies a lot of the professional pessimism. Whats wrong with this story . We are hanging on bernankes every word. And thats whats wrong with the market. Today, yesterday, nothings happening. Everybodys biting their nails waiting to see whats going to happen tomorrow. And when that happens, i think people are going to have to argue with each other what it means. Dont we know whats going to happen . We know the fed at some point will scale back on monetary support either later this year or early 2014. How does that change your investment approach . I know we were speaking about this before. Do you find that more investors are now looking for companies that yield high growth going forward, maybe a compounded annual growth rate of 5 to 10 over the next year . Thats a great question. I think do we go back into the defensive game, or do we rotate into names Like Health Care . I think that havent really seen a lot of bumps in the road over the last couple months, when investors have actually not known what to do. But i do think that investors actually have to put money into high yielding names and thats where were going to see, i think for the rest of this year, investors put their money. Am i the only one bothered by the fact that now less than 2 Economic Growth seems to be the new norm . Talking about 2 to 2. 5 for several quarters. Now were talking about 1. 5 to 1. 8 . Without strong Economic Growth, where are the corporate profits coming from . Earnings are doing fine at this stage. In the fifth year. Earnings are doing fine. Theyre growing at 6, 7, and 8 . Earnings profits are the mothers milk of stocks not gdp. By the way, gdp, if anyone ka , cares, tomorrows release. Youll see revisions going all the way back to 1929 so you might see an entirely different picture of gdp. Earnings are okay. The m2 money supply is growing at 7 . Thats why this fed thing. People get too excited. The basic money supply is growing at a steady rate. And the u. S. Is doing okay, right . Weve never been fabulous. But its okay. Thats why we cant get too bearish on this. Im not bearish myself. Im actually cautiously optimistic. I think if we stay on the ball in terms of earnings from corporations, i think if we can grow those slowly, not dramatically, we can probably get through this next chopping period. I mean, did you think obamas tax reform what did you think of that . Oh, its not tax reform. Should be progrowth. The market didnt react to it at all today. All he wants to do is have more to look, it basically comes down to this. President obama believes that the government should decide where and how money is spent. So any money he gets in from lower tax rates on this tradeoff with Corporate Tax rates, hes going to spend on solar panel companies. Thats not going to spur an economic boom. But on the other hand, to be fair, under obama, we have had quite a good stock market. That is a fact. And i hear a lot of cash on the sidelines that could be allocated back into the equity market and could potentially help the s p 500. It could absolutely see the market globally on the equity side has taken in a tremendous amount of money of the last couple weeks and couple months. But much of that has gone into money markets. And its because investors again are a little skittish whats going to happen. Demand for cash is substantial. That money on the sidelines is still real. Eventually, right. Eventually. Thats why this cycle is going to go on for a long time. This is a little different cycle. Ive got to get out of here. Thank you. Thats it for tonights show. Thanks for watching. Im larry kudlow. Watch profits later on this evening on cnbc. We all believe in profit. Well, did you know that old macdonald was a really bad speller . Your word is. Cow. Cow. Cow. C. O. W. E. I. E. I. O. [buzzer] dangnabbit. Geico. Fifteen minutes could save you. Well, you know. 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