And frankly, a Government Shutdown seems more likely than ever. And ben bernanke says this concern was the factor in the decision not to cut back on their stimulus. And what will it take to get younger americans to invest in the markets, to save, or even buy homes . We assemble an all star panel of young cnbc millennials to get some answers. All and more coming up on tthe kudlow report, beginning right now. Good evening, everyone. Im larry kudlow. Its 7 00 eastern time, 4 00 p. M. On the west coast, and we are live on the kudlow report. The big news today, ben bernanke gave us a shocker that stocks and almost Everything Else just loved. Take a listen. In light of these uncertainties, the committee decided to await more evidence that the recoverys progress will be sustained before adjusting the pace of asset purchases. All right. So no taper. The fed is going to continue its 85 billion bond buying program. And check this out. Investors really cheered the news. The dow and the s p 500, both soared to fresh record highs. The u. S. Dollar tanked. Gold and oil spiked. The tenyear bond yield sits at about 2. 7 . Thats a fiveweek low. And interestingly, Home Builders and utilities seemed to rally the most. My quick take, with the job market that is actually slowing down, bernanke probably did the right thing, but the 4 trillion Balance Sheet they have is unmanageable, and there has to be a fix at some point soon. And all this comes with a stronger likelihood that janet yellin will be nominated as fed chair by president obama this monday, september 23rd. So how should investors make money in this Market Going Forward . What is the next step . Lets welcome our allstar panel. Here jim iuorio, kenny policari. I want you to lead us off and tell us what do you do tomorrow after this massive rally today . What do you do . Well, you dont sell your stocks yet. We have a dovish response from chairman bernanke and chairman yellin is coming in who is even more dovish. She made some dovish comments today as well. So the stock market has to love this. Although all day i couldnt figure out why the inconsistency of the chairman saying we want to be transparent, and then have the market completely leaning toward the taper and then pull the rug out. My true belief is the one thing he worries about the most is losing control of volatility and price. And the one way to combat that is to make sure nobody gets comfortable, thinking that there is a path that is set forth. If he pulls the rug out a couple of times, no shorts will sleep at night, and perhaps he gains greater control. But the stock market should continue to love this as the week wears on. All right. So you like stotts. Ron, what would you do tomorrow morning . I dont fight the fed, but on the other hand the fed comes out today. They cut gdp growth. Right. They cut core inflation. So, look, the market is probably going to like this. But this market rally has been p e expansion. We need for stocks to go materially higher, we need Earnings Growth. And i dont know where Earnings Growth is going to come from with gdp growing 2 . This is a Good Opportunity to get at you, get out on a high. Would you be a seller . Im not a shortterm trader, larry, but im bullish about the longterm. But ill tell you what. Ill buy this market if they get their act together in washington. Tax reform, entitlements and maybe immigration. Lets get that fixed in washington. Good luck on that. Kenny pollicari, what did you take away that would apply to the next couple of months . I think you to be quite concerned. Jim said it and ron said it and you said it. People should really be concerned that were not nearly as far along as everyone would think we are, or as even they led us to believe we are. So i think you have to tread cautiously. As a shortterm treasurer, i think you have to start taking money off the table. Either you get short or start taking money off the table. Once they start pulling this report apart and start dissecting it and really realizing what it means, people are going to realize what are we celebrating. Ron, kenny, ron makes a good point. The fed downgraded its forecast or to the rest of this year and for 2014, which is very interesting at the same time. I mean, i dont know when theyre going to make any moves to tighten things up. Jim, what were you going to say . To kenny, is the quantitative easing doing anything from a macroeconomic standpoint, or is it just flooding money into the market that ends up in stocks or lowering the yields on the tenyear . So you have to chase yield and go into stock. It o to me it seems that stocks continue to go up. Other than it is a liquidity trap. Of course it is. Stocks are going to go up because theyve given you more kool aid. Weve seen it for four years. No doubt. They pump more, the stocks. But the stock shouldnt be going up. To rons point, were missing the disconnect between the fundamentals and fundamentals. Earnings earnings have done great. If you go back, im talking about going back to whole period. In march of 2009, go back to the First Quarter of 09, and just keep running that out. Now earnings are slowing down. But theyre up almost the same amount as the stock market. The question is what is your earnings estimate Going Forward . Thats a key question. In other words, instead of playing the fed, id like to play profits, because profits. When they hinted earnings were 100, today theyre 104. And what are they thought to be . 119. Corporate profits is a percentage of gdp. Alltime high. How you going to get 14 Earnings Growth with gdp growth under 2 . A smart guy, old friend, he is talking about a big 120 per share on profits. Thats a big number. And thats a bullish number. Do you think thats just way off the charts, too bullish . I dont see how you get 14 Earnings Growth with 2 gdp growth. All right. Weve done a lot better. I mean gdp growth 2 now for four and a half years. Right. This is the worst recovery since world war ii. Right. And yet and yet and yet businesses have figured out ways to get profitable. Topline revenues are not growing, but theyre getting profitable because theyre managing their experiences. We certainly know the layoff story. Fed ex today, right to the point. People are cutting back on the faster shipments and deciding, listen, if it takes an extra two days to get there, thats what it take. Its that much cheaper. Thats the way im going to do it. So thats just a statement about how people are feeling. Businesses and companies and the kroese. Jim iuorio, what do you do about gold . I want to ask you about gold. I want to ask you about oil. A big move. I want to ask you about bond yields too. How far down can bond yields go . How far up can gold and oil go on an easy money speculation from the fed . I think that bond yields are the tenyear only goes to about 2. 55, not much higher than it is here, because i do think taper talk will surface again relatively soon. They know its not doing much except inflating asset bubbles. Gold, i think its the once bitten, twice shy. I think people have a very, very strong memory of that absolute collapse that began in may. I think 1400 in the futures is where im considering selling some gold. Im flat gold right now. But i dont think gold is a trade because i do think taper talk resurface. Oil. Every time its gotten to 110, the conversation starts to turn to demand destruction. And remember, there is a price where people stop buying oil, buying gas. I may be a seller at 109. Youre not really optimistic on all this from today. Heck no. Ron . No. Youre a longterm investor, though. Exactly. Strategize with me. What do you tell them . Again, i want to see real Earnings Growth. This market rally has been p e expansion. Up 20 , earnings are up 4 . I just want to know where were going to get real topline growth and real Earnings Growth. And ill go back and watch the rest of your show when we talk about policy decision. Oh my god. That we need to implement tomorrow. Oh my god. To get real growth. Were going to have a segment that is not going to be a happy talk segment from washington, d. C. Go ahead, kenny. I think as a longterm investor, this goes to the point, right. As a longterm investor, i think if youve got the plan and its laid out and its solid and its well thought out and well balanced, i think the last thing you should do, people shouldnt go rung out and selling their stock. They need to be patient. And on weakness, actually let me play bernankes game. Im going to put myself in his shoes. What he is basically saying, and if its janet yellin, i think she is going to do the same thing. Quantitative easing will be phased out in about a year. But the fed funds rate is going to stay at zero for the next year, 2015, right . So youre not going to have any, quote, tighter money, really, really, until 2016. Now, now, that might be very bullish for stocks. That might very bullish for the economy. In other words, why not the cyclicals . They did very well. I know the utilities did well. But the Home Builders did well. When you look down the list, materials, thats commodities did well, tech did well, industrials did well, energy did well. Those are cyclical progrowth stocks. That says the easy money from the fed is going to pay off in and the economy is going to grow. I think if you talk a lot of strategists, 2014 is a year that people are looking for as they turn around, not only in this country, in europe as well and in asia as well. So if you believe the longer term story, then i think youre right. I think the trouble is if they keep the federal funds rate near zero, they cant really control what happens on the long end. And the long end is what really affects the consumers, whether its home mortgages, credit card rates, all that stuff. Thats what they cannot control with keeping the fed funds rate at zero. But jim iuorio, i still think the trade bonds is on. I still think the sell bonds trade is on. I agree with you too. I think were being played here. I think its being engineered for higher rates. I think they want higher longend rates and they would rather keep the fed fund rates low for a long time. Just because they say theyre going to keep the fed funds rate through 2016 or 2025 or whatever it is, doesnt mean theyre actually going to. Theyve showed us before that their data dependent. They really are. One thing too. We can talk about the cyclicals all we want. But utilities today outperformed everybody. To me thats just a yield grab, thinking that the rates are going down. I disagree with that. And larry, we had a big party today, okay. But the fed decreased its forecast for growth. Right. For this year and next. And i think that when they dissect this, i think the market is going to take a little breather here. So thats a cautionary tale . Absolutely. All right. Jim iuorio, thank you. For the other really big news coming out of washington, House Speaker john boehner promises the house will vote on and pass a continuing resolution that funds the government and defunds obama care. Now, the real budget battle is going to begin, and so a new threat for the markets of a potential Government Shutdown. And later in the show, what on earth is the s. E. C. Trying to accomplish by voting today to require companies to publish their ceo to median Employee Salary ratios. Does this seven any economic good . Or is it just to play indicate the antibusiness, anticapitalist, antisuccess types like occupy wall street . Were going to dig into this with former s. E. C. Chief harvey pitt. Meanwhile, dont forget. Free market capitalism is the best path to prosperity. Wall street and washington really have to get their acts together. Im kudlow. Well be right back. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. All right. House republicans issuing a challenge to senate democrats, promising to vote on a continuing resolution this week which will fund the government after september 30th, but it will also lock in the sequester savings and it will defund obama care. This is making the chance of a Government Shutdown greater in my judgment. Even ben bernanke said the threat of a shutdown was one reason why he decided not to taper back his bond purchases. Take a listen. The extent of the respects of restrictive fiscal policies remain unclear. And upcoming fiscal debates may involve additional ricks to Financial Markets and to the broader economy. Here now to respond we have House Republican congressman James Langford from oklahoma. Jim langford, thank you for coming on. Thank you. Let me walk through the timeline. Im an old budget guy from omb many years ago. Youre going to make this vote on the house that will pass. Its going to have defunding obama care, it is going to have the sequester. Then you send to it the senate. The likelihood of passing the senate is zero because the democrats are against it. So theyre going to send it back to you in the house. The days pass. The clock ticks. Tell me what happens. We will be back here next week. Well send it over on friday and let the senate deal with it over the weekend and early next week. Well be back here on wednesday, and well be ready to respond whatever they spend back and be able to ping back again. Were focused on trying to get this resolved. I hear lots of folks talking about shutdown. Were not talking about 00 in the house. Were talking about trying to resolve the longterm fiscal efforts. The debt is spinning from 1. 5 trillion to 300 billion in three years. Were trying to get it back in balance. We want to continue to do that. I hear you on that. But i guess youre not youre going to come back into session. You may be working on the weekend to get that done. Right. Its actually the senate side. In some sense, they move so slowly over there, its hard for me to understand whether theyre going to take a vote or what. And then you have to go back through conference, jim . Is that what is going to happen . Well see. A lot of these things they ping back and forth. Theyll get one side that will resolve it and the other side will take it. You can see that from the payroll tax extension two years ago. That happened that way, that one side sent something, the other side sent it back and the other side take it. It doesnt necessarily have to go through conference. We can get a loft these things worked out. Ive got 12 days. Can you make it . Can you make it . Sure we can. Ive seen the senate take things up the same day. All this talk the senate has a long procedure. They also have procedures to move things quickly. If they want to move quickly, they can move extremely quickly. When they dont, mercy skirks they go really slow. And then the debt ceiling comes almost right away. I guess midoctober. Thats right. What i gathered today is that eric cantor, majority leader cantor said theyre going to tie in the debt ceiling. What, the keystone pipeline, a oneyear obama care delay, and some tax reform. Thats a lot for a debt ceiling. Can you get that done . Sure we can. There is different elements. The debt ceiling debate somewhere, we think were going to reach that target date somewhere around the 18th of october to about the 5th of november, somewhere through there. So we have a little time to work this out still. But the focus on the debt court of appealing is what we typically do. How do we get to a point that we dont have to keep doing debt ceilings. Weve reduced it the last three years. We want to continue to make the same forward progress. You do that by Economic Activity out there. If row can reform the tax code, youre going to get more Economic Activity happening. This is not the tax plan coming to it. It would be a proposal for how do we get to a tax plan. Deadlines, date, expedited processes in the house and senate, that kind of structure over the next couple of months we can do that. Keystone pipeline, you know extremely well tomorrow is the fiveyear anniversary of the permit request. Now, this january they will have the southern leg of the keystone done. They permitted it and constructed 800 miles of pipeline from cushing oklahoma. So we think that has to get moving. We think there is entitlement reform parties that need to be done, modest reforms that the president has recommended that we have also recommended. So we think there is some common ground. We also want to deal with the sequester. A lot of people say we have to be able to pull back the defense cuts on that. That has to be replaced with Something Else if we did that all those things can be resolved. Its not as if were just starting. Its not as if tomorrow everybody wakes up and said lets keep talk about it. Weve talked about it for months. Now its time for a decision. In timing and so forth, on the continuing resolution that will have defunding obama care, i dont know specifically how youre going to defund obama care, because 80 is an entitlement. Right. But i dont want to get into that hassle right now. Leave it be. What im going to ask you is this. If and when the senate sends it back, theyre going to send you a clean cr. All right. Will the Republican House conference then vote on a clean cr if the sequester levels are there . Or will there be more obama care . This is the part im worried about. If you let it go, having done it, if you let the obama care go for the moment, im against the damn thing too. But you dont have enough time. Can you just pass a clean cr at the 2014 lower spending levels of the sequester . Im going to let the 233 members of the House Republican conference be able to determine what we can all pass together there is not any enthusiasm for that. Were hearing a lot of things from our districts, from individuals that are personally affected by what is happening with obama care. So we want to focus on what can we do. My responsibility is to do whatever i can to protect the people of my district from the harmful effects of the law. They want to know what can be done. If that cant be done, what can be done, because something needs to be done to be able to help them. Its a little unfair, congressman, but i want to ask you anywhere. Youve been very forthright. Are we talking the threat of a oneday shutdown, a twoday shutdown, a threeweek shutdown . How would you assess those risks . Yeah, i dont even know how to speculate on that, larry, to tell you the truth. We dont really want a shutdown. Thats not what this is all about. I know the democrats find it very convenient politically 20 throw out and say oh, my gosh, here is a Government Shutdown. What you hear from us, this is a moment. Weve got to talk about this. Weve talked about it for months and months and months. The senate wont take up anything we send over. We have to take this up. Weve got to be able to resolve some of these big issues. We had a hearing today on the affordable air act in the subcommittee i chair. There are people sitting in front of us that their lives are really affected and there really are implementation issues. All right. To just say there is nothing wrong with this, to keep moving forward is to ignore the realities on the ground that there are real problems that need to be resolved. I hear you. Thank you. We appreciate it very, very much, sir. The new president of iran made a bold promise in an exclusive interview with nbc earlier tonight. Were going to show you what he said, and you can judge for yourself. Plus, were going to get you updated on this big day for the markets. Please stay with us on the kudlow report. I was made to work. Make my mark with pride. Create moments of value. Build character through quality. And earn the right to be called a classic. The lands end no iron dress shirt. Starting at 49 dollars. 20 years with the company. Hool. Thousands of presentations. And one hard earned partnership. It took a lot of work to get this far. So now im supposed to take a back seat when it comes to my investments . Theres zero chance of that happening. Avo when you work with a schwab financial consultant, youll get the guidance you need with the control you want. Talk to us today. Is that true . Says here that cheerios has whole grain oats that can help remove some cholesterol, and thats heart healthy. [ dad ] jan . Lets get back to big story of the day. No taper from the fed, and a huge reaction in the markets to this news. Cnbcs Bertha Coombs joins us now. Were you surprised . I wasnt all that surprised. No, i wasnt surprised. But i thought they would do a little. A little. I guess a lot of folks were expecting that. This came as a surprise apparently to a lot of folks on wall street. Cnbc surveyed all the big brokerages, and they were all expecting at least some kind of taper, even 10 billion or less per month of bond buying. And thats why we saw such a big reaction when the fed said no, not yet. Were not going to do it yet. The dow was red all day until 2 00 p. M. When it shot into the green and shot up big, closing up 147 points at a new alltime high. The s p five also notching a new alltime high. The level there is 17. 25. The nasdaq composite, it will be a while before it gets to an alltime high. But it did reach its highest level in 13 years, all the way back to 2000. There was also a huge reaction in gold, which shot up 54 bucks an ounce. Oil also jumping up big, nearly 3 a barrel to nearly 8. And we knew there would be a big reaction in the bond market. Look at the tenyear yield. That was all the way down to 2. 7 , just about two weeks ago. It was just above 3 . And one piece of international news. Thats what we were about to show you right there, i want to pass on before we go. Irans president Hassan Rowhani telling ann curry his administration will never, rather, will never develop nuclear weapons. Its hard to believe. But its well, remember what president reagan used to say . I do indeed. Trust, but verify. Thats always the question with all of these. Absolutely. Iran, syria. I can name a couple dozen others, but we dont have time. Many thanks to Bertha Coombs. I appreciate it. Now, big story today of course Ben Bernankes surprise move not to cut back on fed stimulus at all. The markets love it. But is it the right policy . Were going to tackle that with former council of economic advisers greg mancue of harvard, next up on kudlow. Hero if you had a chance to go anywhere in the world, but you had to leave right now, would you go . Man oh i cant go tonight woman i cant. hero thats what expedia asked me. Host book the flight but you have to go right now. Hero laughs and i just go . This is for real right . This is for real . I always said one day id go to china, just never thought itd be today. Anncr were giving away a trip every day. Download the expedia app and your next trip could be on us. Expedia, find yours. Woman everyone in the nicu all the nurses wanted to watch him when he was there 118 days. Everything that you thought was important to you changes in light of having a child that needs you every moment. I wouldnt trade him for the world. Who matters most to you says the most about you. At massmutual were owned by our policyowners, and they matter most to us. If youre caring for a child with special needs, our innovative special care Program Offers strategies that can help. Welcome back to the kudlow report. Im larry kudlow. In this half hour, a huge stock rally today after ben bernanke delays the expected cutback in fed bond buying. Was this the right move . And speaking of right moves and wrong moves, why on earth are younger americans investing, saving, or even buying homes . We have put together an allstar panel of young cnbc onair talent to try to shake some sense into the socalled millennial generation. In evaluating whether a modest reduction in the face of asset purchases would be appropriate at this meeting, however, the committee concluded that the Economic Data do not yet provide sufficient confirmation of its baseline outlook to warrant such a reduction. All right. That of course was fed head ben bernanke earlier today, explaining the largely unexpected fed decision to keep stoking the stimulus. Here now to discuss the impact of this continued bond buying, we welcome back greg mankiw, professional at harvard of economics. He is also chairman of the president s council of economic advisers and to george w. Bush. He is an adviser to the Federal Reserve bank of boston, and if that werent enough, he is the author of the bestselling economics textbook in history. And oh, by the way, some influential commentators are touting greg mankiw as the best choice to be the next fed chairman. Were going to get to that fed chairman stuff in just a moment or two. Greg, first of all, welcome back. Its great to see you. Thank you, larry. I just want to jump right in. Does it make intellectual, intuitive sense to you that bernanke stays out of the market, no slowdown in bond buying, and stocks soar . Does that make sense . I think it does. The fed once they get out of this unconventional Monetary Policy business, but they want a reason to do it. And neither the labor market nor the unnation rates are giving them a reason to stop this easy Monetary Policy. So until theyre given a good reason by the data, i think theyre going to keep doing it. So you think thats a good signal to the stock market. I know youre not a stock market trader and so forth, but i also read your blog religiously, and i know you occasionally comment on stocks. That a good reason. Sure. To stay long on stocks . Because the fed is going to continue to be easy . I think it is. Its just that the Interest Rates are going to be lower than they otherwise would be. And the Interest Rate goes into the discount factor on stocks, and therefore stocks go up. I dont think it was a shock. The one thing that is a little disappointing in what the fed did, they shouldnt have surprised people. They should have signaled this a little better. Theyre big into transparency in this fed. They really did catch people by surprise on this one. They havent been very transparent in the leadup to this one. I agree with that. Its a hard thing, but i agreement. Let me ask you this, greg. This is the oneyear advocacy of qe3. Its been september last year, september this year. Okay. The economy is still growing, i dont know, 2 , maybe less. The rate of job creation actually looks like its slowing down. And the fed has poured all this money, over a trillion dollars into the economy. I mean, let me ask you. Is this qe policy working . Should we stay with it . Well, i think its very hard to know because you dont get to observe the counter factual, what would the economy be without this extraordinary Monetary Policy. By michigan guess is it would have been weaker, and that what the fed has done has kept longterm Interest Rates lower than they would be, and that has reduced the cost of borrowing. It has kept housing from going a little bit and kept business going a little bit. So i think it has been a good thing. I dont think its been extraordinary. The economy recovery is very meager, as you point out. But i think it would have been even worse if the fed hadnt done these extraordinary things. Some people are worried. Actually, there was one dissent today from ester george. But there are other Federal Reserve banks that i think might dissent. Some people are worried that the policy is creating a bubble, that its mispricing risks, and its going to come back to haunt the economy before long. Do you agree with that . Is that a risk . It is a risk. Its something to keep an eye on. But the main things to keep an eye on are inflation and employment. Those are the two main variables. These bubbles matter only to the extent they impinge on inflation and employment. So far there is no evidence they have. So yes, i think there is reason to be concerned. Its one of the reasons they want to get out of this business as soon as they can. But they just dont feel they have a reason to do so yet. Until the labor market looks stronger, or until inflation looks like its getting up to the 2 or 2. 5 that theyre aiming for, i just dont see what that they have a rationale for getting out of this business. What if the problem was really with the economy. Lets say the difference between 2 growth and say 4 growth coming out of a deep recession. What if its fiscal problems, tax problems, regulatory problems, obama care problems, and other obstacles that have nothing to do with money . Maybe were barking up the wrong money tree and we should be dealing with these fiscal reforms that would have some progrowth incentives to them. Well, i agree with you. I would love to see progrowth fiscal reforms. I would love to see a lower the base. Unfortunately were not getting that. If that were the only problem we faced, then i think you would start to see inflation rates starting to heat up. If unemployment were high for structural reasons, inflation would be higher than it is. I suspect why we have fiscal problems for sure and id like to see fiscal reforms, i dont think that gives an excuse for Monetary Policy to not worry about the state of the labor market. We actually had double tax hike whammy this year, one on the top end of the bush hikes and then the obama care one. And then the mandates and then the rules and all the rest of it. Do you think that is blunting job creation and creating, you know, a massive amount of parttime jobs with low wages . I think it probably. I dont think we have definitive evidence on this. So i think reasonable people can disagree. But the increases in marginal tax rates for middle americans that are implicit in obama care are really quite large. Casey mulligan at the university of chicago has done some work on this. He has documented their quite large increases in marginal tax increases, and not just on the rich. On the vast majority of middle americans. All right. What is your own Economic Outlook . Here you are. The fed is tapering. Were in year two of qe3. Its going to go on for a while. The zero Interest Rate is going to go on through 2014, according to the fed. What is your Economic Outlook, greg mankiw . I think probably more of what weve seen, which is a positive growth, but meager. And not enough to get people excited. The one positive thing is the stock market has been doing quite well, and thats alleged indicator, and also a driver of Economic Activity. But the other signs dont look like a tremendous recovery. I think we have structural problems, and i dont see this president and this Congress Getting together and working out those structural problems. The longterm fiscal problem is still there. My guess this president is going to kick the can down the road to his successor, and were not going to know what the resolution is going to be for quite a few years. All right. Last one. Some very distinguished commentators have been writing you up as a potential fed chairman. Okay. I wouldnt mind myself, to tell you the truth. But i want to ask you, since i dont think you have thrown your hat into the ring and havent had the big phone call, can janet yellin handle the freight as fed chairman, in your judgment . Yes, i think she can. I think janet is a great economist. She is a real consensus builder. She knows the Federal Reserve system. People in the system like her. Ive never anyone who doesnt like her. And i think thats a very good attribute to have when youre trying to herd the cats on the fomc. I know its not the big problem right now, but down the road, might a chairman yellin keep money too easy for too long as we did ten years ago . I think she could, but i think that there is enough hawks on the committee and she is a consensus builder that shell listen to those. So i dont think the fomc as a whole would end up making that mistake. All right. Well leave there it. Greg mankiw, harvard university, bestselling textbook in history. I love that thank you so much. May have been a big day for the markets, but dont tell anyone you know who is under the age of 35. Thats because the socalled millennial generation isnt investing in stocks, isnt buying homes, and isnt saving. Weve assembled an allstar panel of young cnbc talent to get these kids to take the ipod buds out of their ears and start investing in their futures. Im kudlow. Well be right back. When we made our commitment to the gulf, bp had two big goals help the gulf recover and learn from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, so we can all produce energy more safely. Our commitment has never been stronger. All right. Growing up through the Great Recession has some millennials wary of investing. A new Wells Fargo Survey says more than half of millennials are not as confident in the stock market to invest for retirement. So how do we get young folks more comfortable investing in stocks . And how do we get them to make a buck . Here now is our allstar team of young cnbc stars, kayla tausche, dominic chu, and squawk on the street anchor occasionally evans. Youre all very nice to do that. Kel, i want to begin with you. Youve got this t. Rowe price study. The numbers are so startling. If you put a thousand dollars in stocks in 1982, just that one year, by the end of 2012, you would come out plus 22,000. If you did bonds, it would only be half as good, and if you did savings accounts, you would get 3700. Why cant the millennial generation get that . It sounds good in theory, but the problem is one of disposable income. They came of age several years ago. All they have really known is recession. And i speak from that generation as well. A lot of my friends have been through six, seven, eight unpaid internships. Theyre finally settling into the beginning of their careers. They dont feel like they have the disposable income to even put that money in stocks. Theyre paying for their car, their insurance, their lodging, and i they just dont feel like not even 500, the dollar cost average and start a 401 k account . Well, a lot of people have 401 k s, but they have them in terms of their company. A lot of companies dont really provide that or dont match that anymore. So theyre putting in a smaller and smaller amount. But i think that wage growth hasnt really grown the same as a lot of other cities and sectors. And i think that young people just dont feel like they have it at the end of the day. Kelly evans, did they understand it . I think to some extent there is an educational problem here there is also a cultural problem i want to get to in a minute. But lets do the education. Do they get it . Do they understand brokers . No. Do they understand Financial Planners . Do they understand 401 k s . Larry, i think people to some extent understand they have to put money away for retirement. But to kaylas point, there is not a lot of extra money there. This is a generation coming out with a ton of student debt. They have a lot of unpaid internships, a lot are working for companies that dont have the automatic match in the first place. The education goes back to early ages. But again, its not just people who arent aware of what they should do. Its also people who dont trust the financial system. And weve seen this. Think about some of the movements that have come out of our generation. Occupy wall street, even the Tea Party Movement and some of the candidates like ron paul have a surprising amount of support among young people, and there is a sense the Current System is not sustainable, that wall street and the stock market is a rigged game set up for the 1 that is not something they should be fundamentally exposed to. So there is a huge problem. All right. This is very important. Thank you for that. I want to take this point. Dominic, you may have a million other things to say. But i want to take kelly evans point. I think that the media in particular has painted wall street in such a negative light, everybody, just blanket, i think the idea of getting rich in retirement has also been painted in a negative light by the media. I think theyre trying to convince people that somehow getting rich or living comfortably is a bad thing. And you know what . We should all work, and we should all get the same thing, and it should all be fair, and its about equality of results, not equality of opportunity, which is anticapitalist and just blows me away. You know, here is the tough part. I mean, kayla and of course kelly have great points, and the reason why its such a big deal is perhaps there is this culture developing right now where success is frowned upon. That if you do well, that somehow youre not going to be in that mass of people. Youre not in touch with what is happening overall with everybody else in the economy. But i will say this about the millennials and about whether or not they should be investing. There is no other way that you can comfortably get to a point where you can provide for yourself or your family, and certainly not when youre able to make an income anymore without investing. Nobody is going to do it for you. And question, kayla, to put a positive constructive spin, how do we and others persuade the millennials that its a good thing . Here is how to do it. Its a good thing. And youve got to stick with it. Literally for the next 50 years. How do we persuade them . I want to be positive, larry, but were talking about an argument versus a practical one. Millennials know they need to be saving, they just havent really gotten there yet. Because you hear all this talk about okay, you need three to six months of your rent in savings. You have to stockpile all of this money because they know that they can be successful. They know that people have been successful in the stock market, but they also have this knowledge that it can all go to hell in a hand basket. And they want to be able to pick up and move for a job. They want to have the savings for a rainy day that is most important for them first and foremost, not their retirement. The mattress model just doesnt work for me. Thats the problem. Here is the problem too. If you think about what it comes down to psychologically, its about hard decisions. And this generation is going to have to make some hard decisions. They have to sacrifice some of the Immediate Gratification for spending on whatever it is they spend on today in the event that they have more money to be able to put away in the future. If they invest today, the likelihood is they could have a more comfortable life some time in the future. Sure. Its about hard decisions. Go ahead, kelly. I would make this point quickly as well. This is kind of a post modern generation, larry. Keep in mind all the practical things doms talking about that people might in the back of their mind know they should do or their parents or grandparents did, arent sure it applies in a world where confronted by nuclear attacks, all the things going ond on around us that contribute to the extent of terror that can be assistant. And its about the personal financial position and what is worth the longterm. Wait a second. I grew up during the cold war. You want to talk nuclear war. I grew up exactly during the cold war. And by the way, i worked for government. And we grew up in y2k. We all lost money. We all lost money. But the point is, the educational part here, and thing is so important. They have to see the numbers. All right. You got this t. Rowe price number over that whole period, including the 87 crash, including the technology bubble, including the financial meltdown. That in the long run. Right. Saving and investing in shares doesnt mean it has to be 100 in shares. But saving and investing in a good thing. There has to be an education. Right. Right but to fight all the leftwing nonsense that says larry, all im saying is it comes down to trust. There is a there is not that trust in the future i think that you can really tie a lot of this back to. It is very practical. But i dont think you can deny as well there is something fundamentally deeper that our generation is very concerned about and feels a little confused by. You guys have to be more optimistic there is too much pessimism and not enough optimism in this country. And that has been true for many years. Im a quintessential optimist, having lived through it. But i understand it. I get that. And somehow we have to turn that around. Kayla tausche, thank you very much. Kelly evans, dominic chu, you are all great. The s. E. C. Seems to be throwing a bone to the occupy wall street crowd, speaking of pessimistic doeps. The commissioners at the s. E. C. Voted today to force companies to publish ceo to median worker pay ratios. What purpose does that serve . Former s. E. C. Chief harvey pitt is going to join us to give his opinion on that and other stuff, next up on kudlow. It starts with little things. Tiny changes in the brain. Little things anyone can do. It steals your memories. Your independence. Ensures support, a breakthrough. And sooner than youd like. Sooner than youd think. You die from alzheimers disease. We cure alzheimers disease. Every little click, call or donation adds up to something big. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. A big victory for big labor and the occupy wall street crowd. The securities and Exchange Commission voted today in favor of a ceo pay ratio rule which could force companies to share how their executives paycheck compare to the rank and file employees. Me, i think this is nothing but class warfare from the democrats on the s. E. C. It is an attempt to punish successful executives for creating value and wealth for investors, but also for creating a rising tide of success so their own Employee Workforce can own company stock, get raises and other benefits like first rate health care. Thats the role of a good ceo, to help the employees. The Labor Movement just doesnt get it. Anyway, lets talk. Who better to ask than former s. E. C. Chairman harvey pitt. He is now the ceo of colarama partners llc. Before we jump into this s. E. C. Thing, youre a cnbc regular. You saw the big easy money move by the fed today and the roaring stock market. I just cant resist asking you. Can this roaring stock market last . Well, i worry because the roars are artificially induced. What that means is when the roaring factors are taken away, the stock market is going to collapse, and i worry about the peoples reaction to all of that. I think we needed some moderation. But its great that the market is thriving. I just wish it were based on the fundamentals. All right. Well leave it there. I want to get to this s. E. C. Payment ratio. This just sounds like leftwing drivel to me, an attack on successful executives. You tell me, harvey. Youre chairman of the s. E. C. What is the s. E. C. Doing this for . Well, they were forced to do it in one sense. Congress adopted in the dodd frank act a provision that says the s. E. C. Must require this disclosure. Now, the truth of the matter is this is a ridiculous statutory provision. It makes absolutely no sense. And part of what it does is it takes people like janitors and messengers and the like, temporary employees, and all of those employees compensation has to be compared to what the ceo makes. Its ludicrous. This is an evident to embarrass the ceo. This is an effort to attack a successful ceo. Thats the way i see that. Its just a bunch of meddling and tinkering. Look. A successful ceo helps the workforce, dont they . They help their employees. Employees can climb the ladder. They can make more money, get better benefits. What is wrong with that . There is absolutely nothing wrong with. This and youre 100 right. When this provision was put in, it was put in for solely one purpose, and thats to embarrass ceos. Now, whether ceos are compensated appropriately or not is an issue for boards of directors and in a sense shareholders. They dont have to invest in companies that they dont like. But comparing a ceos compensation to median employee compensation, wherever those employees are located is one of the silliest ideas ive ever heard of. Yeah. First of all, its going to cost them more money. By the way, as i understand it, they may have to put this overseas employees also. So thats going to make the Data Compilation even more expensive. But basically, dont these companies, dont these companies already, harvey, publish a lot of information about ceo and executive compensation . Didnt we cross that bridge a while ago . A long time ago they clearly disclose all of this. And one of the worst factors, larry, is the s. E. C. , in an effort to try and give companies some flexibility has refused to set a specific methodology for calculating median employee income. Unfortunately, what i think that is going to produce is its going to produce lawsuits, because some companies will do it one way. Another companies will do it another. There will be absolutely no comparability. So even the Information Congress demanded they get wont be useful. What i hear, harvey, i got to go. But a lot of these labor guys talk about fairness, quote unquote. Its like what i call the equality of results. When this country was founded on the equality of free opportunity. And they dont allow for the fact that good ceos do a lot of good for shareholders, for stakeholders, and for their own employees. Thats what theyre missing. And i dont know how to change that. I dont know. Got to keep fighting it. You got to keep fighting it. Stay with the fight. Harvey pitt, thank you very much. Appreciate it. Thats it for this evenings show. Thanks for watching. We had a heck of a day on wall street today. Ben bernanke almost fooled everybody. Well try to cover this story some more tomorrow and see if there is followthrough in stocks. Im larry kudlow. Well see you tomorrow night. D t or more on car insurance. Yep, Everybody Knows that. 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