Transcripts For CNBC The Kudlow Report 20140208

Coming up on the kudlow report. Beginning right now. Follow me on this number. Only 113,000 new nonfarm payrolls. That was disappointing for january. But the Small Business oriented Household Survey generated a huge gain of 638,000 jobs. And parttime workers fell 520,000. Both wages and hours worked went up. Now, follow this, over the past year, the number of unemployed has dropped by 2. 1 million while employment has risen by 1. 8 million. This is from the households survey. But its just like the Payroll Survey as well. Now, because of this, the jobless rate has fallen from 7. 9 a year ago to 6. 6 in todays report. Thats more than just people dropping out of the workforce. And on top of it, the socalled u6 marginally employed impairment rate fell to 12 from 13. 1 just last month. Another healthy sign. All that said and all im saying is the economy is growing at about 2. 5 , thats in line with the average for this whole subpar recovery. Theres no growth burst coming in 2014. Best as i can tell. But theres no collapse either. The world is not coming to an end. Lets talk. Dissect it. Here now we bring in joe lavorgna and we welcome back john macon. And theres robert rice, author of aftershock. His movie is available on dvd and itunes now. Gentlemen, thank you very much on a friday evening. John, i havent seen you in ages. Whats your take . Am i close to the truth . Am i too optimistic . How do you see the world . How did you see the jobs report . This is a very interesting jobs report. Its a great test of where we are here. To summarize, for the last two month, weve created about 90,000 jobs a month. Thats half the rate of the last two years. So i would take it as a little bit more of a danger sign than you. Although there were some bright spots, perhaps the brightest was the increase in employment of people who are longterm unemployed. Probably what they did, they were rational, they heard, longterm befnefits are ending, so lets go to work. So that was a good thing. One of the important things to remember is whats the fed going to do here . I think the market rallied today because the markets counting on bad news being a little bit of good news. Oh that is, the fed is going to get nervous here. Theyre not going to do anything. Theyre not going to change their story next week. But i think what were seeing is the situation where janet yellen does not want to create the yellen put. She does not want to be seen as boosting the market. I wrote about that. You did . Im thinking along the same lines. Robert rice, the fed has the threshold of 6. 5 unemployment, beyond which or below which they said at one time when bernanke was running it not so long ago that that would mean a hike in the target rate, the socalled fed funds rate. Here at 6. 6 in unemployment, 6. 5 could come next month. Do you think the fed will keep its credibility and raise the target rate or throw it out the window . I dont think theyre going to throw it out the window entirely and explicitly. But i agree with john. I think the jobs report today quite bad and i think investors are responding positively because they think the fed is going to slow the tapering. In fact, the fed may stop tapering altogether, at least for the next several months until the job numbers look much better. No way, no way. Joe lavorgna, set them straight. I agree with you, larry. Thats the least they may break their Forward Guidance on the 6. 5 Unemployment Rate. But theyre going to continue to taper. Joe, there were some good numbers in here. Im not saying this was the greatest thing. But the Household Survey is very important. People overlook it it was important. Over the last two months, household employments been almost 400,000. The payroll numbers the last two months were horrible, no question. But if you look at leading indicators of the labor market, jobless claims lower in january versus december, the nfib hiring plans are relatively high. Manpower survey within the data this morning, all the weakness was in services, which runs completely counter to the multiyear high we saw in the employment component of the nonmanufacturing ism. Im actually more upbeat than you are for 14. I think growth is a point higher at 3. 5 . Whoa john, this is where you and i probably do agree. People got very euphoric in the second half of last year. You had big quarterly gdps. People were talking about a big burst of growth in 2014. But still a lot of problems in this economy. Obamacare, one of the problems. But there are a lot of other problems. This has been about a 2. 4 socalled recovery during the whole period. Thats about half of the norm of postwar recovery rate. I cant find a growth burst. Yeah. I dont see it either. I think this is a recovery where the underlying growth rate is about 2 . And we oscillate between saying, its going to be 3 , its going to be 1 . And the fed tries to react to that. Ill make a challenge here. On tuesday when janet yellen goes up to the hill and talks to the House Committee with her Humphrey Hawkins testimony, shes basically going to say, i think things are all right and were not going to do anything. I think then the stock markets going to go down. You think she thinks were not going to do any taper . Oh, no. Im sorry, i misspoke. Were not going to do anything to make it better. Were not going to stop tapering. Were going to keep tapering. Were going to watch the Unemployment Rate. But shes not going to give any hint that theyre there to health. Forward guidance and credibility is going to be damaged im going to disagree a little bit. I think janet yellen especially, unlike bernanke, certainly unlike any predecessor, she has explicitly talked about the twin goals of the fed, that is, not just price stability but also full employment or moving toward full employment. Shes very clear on the record that she is worried about jobs. And i wouldnt be surprised if she went up there and said, were going to at least slow down the tapering. But, bob, wait a second larry, i want to weigh in on this. First of all, shes yet to run a meeting as the chair. So for her to go up there and speak herself for her own views and not reflect those of the committee, which by the way are much more hawkish, in part because of the president s who are there, in addition the fact there are a lot of vacancies, would be extraordinary. I just dont see that happening. John is more right in the sense, if she doesnt sound dovish like investors might think, stock market might go down. But if im right about growth, the market will go up. The Thing Holding back the economy, all those factors, Balance Sheet repair, all those things theyre better. Weve come through this cycle still growing. Why wouldnt we accelerate . Monetary policy is very easy. Ill tell you why. Purchasing power. American consumers still dont have the purchasing power bob, thats a bunch of malarkey. Income is one of the most understated series in the history of the macro data. We had 8 trillion wealth created last year. Surely some of that is going to be spent. Consumption was over 3 last quarter. I want to raise a factual point. In todays numbers i think this is important. Its often overlooked. Average Hourly Earnings went up by. 2 . But average hours worked also went up. And if you look at the yearonyear changes here, youre looking at 4 Income Growth minimal with only about a 1 inflation rate. Those numbers dont measure commission or bonuses or any of that variable just as a bare minimum from this report, theres a lot of income in here. Let me jump in here. You are not talking about you guys are not talking about where the income is going. And the median Household Earnings are still going nowhere. By many measures, the adjustments for inflation are going down. We measuring a rat incoe ina. Most of the money is spent by the higher earners. The fact is that the employment number was weak and everybodys going to be looking to the fed to be nice and the feds not going to be nice. Then the markets will be back to worrying as they were. We came into this year, everybody was totally convinced wed have 3 growth. Joe still thinks we might. We might but i dont see it. And now theres some doubts out there people are trying to decide whether bad news is good news. And today they decided bad news was good news because they think janet yellen is going to give them a put and shes not. I think the stock market read this jobs report the way i did. Rob rice, i want to give you the last word. With Employment Benefits not being extended, i would argue that thousands of people are going back into the labor force and they are taking jobs they might not otherwise take. Therefore, i argue, not extending for the 11th time the unEmployment Benefits is a good thing for job creation. I give you the last word. You know, ordinarily, if this were an ordinary jobs picture, i would agree with you. But its not ordinary. We have still three people looking for jobs for every job thats available and we have a historically, almost unprecedented number of people that have dropped out of the job force environment and are not looking. Not to extend unEmployment Benefits for these people and not put money in their pockets is bad for the economy in terms of the purchasing power that they dont have. I see it the other way. I have to leave it there. Joe, robert, thank you very much. John will stick around. Were going to tackle one of the major questions for the economy which is obamacare. I believe it remains a wet blanket. It has job locks and disincentives everywhere. Were going to debate that next up. I think its clogging up the whole economy. Later on on kudlow, we had that impressive stock market rally today. We finished higher for the week. Is this winter correction finally coming to an end . Free market capitalism is the best path to prosperity. You know else we need . Abolish the corporate tax, launch some free trade and have some appropriate immigration reform. Those are progrowth measures that would get us to 4 . I know, im dreaming. Im kudlow. Well be right back. Theres a saying around here, you stand behind what you say. Around here you dont make excuses. You make commitments. And when you cant live up to them, you own up, and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. Some Brokerage Firms are but way too many arent. Why . Because selling their funds makes them more money. Which makes you wonder. Isnt that a conflict . Search proprietary mutual funds. Yikes then go to e trade. Weve got over 8,000 mutual funds and not one of them has our name on it. Were in the business of finding the right investments for you. E trade. Less for us, more for you. The funds prospectus contains its investment objectives, risks, charges, expenses and other Important Information and should be read and considered carefully before investing. For a current prospectus visit www. Etrade. Com mutualfunds. Welcome back to the kudlow report. Even the white house now admits that the socalled economic recovery is still subpar. But they dont seem to understand the negatives associated with obamacare. Here now is democratic strategist Stephen Mcmahon and we bring back economist john makin, a former consultant to the u. S. Treasury, the cbo and the imf. Steve, a lots been printed about the cbo estimate, 2. 5 million jobs lost, the socalled job lock. Theres disincentives for workers, the socalled poverty trap. Businesses are not going to hire because they dont want to pay for all this. I dont see this economy really bursting out until we make some major changes in obamacare, as in repeal it. Well, larry, thats not going to happen. I think theres no question and the president s even said if there are problems with obamacare and the republicans have constructive solutions, hes open to discussing them. Im glad johns here tonight because he was at cbo and im sure he read the whole report. Yes, yes. And the whole report said a number of things that werent quite so damning, which you didnt mention, and havent really been covered in the press. They include the fact that the cbo says over the next ten years on balance, the aca is going to increase the demand for goods and services which is going to create jobs. The insurance premiums on the exchange are 15 lower than what people were projecting, which the cbo also noted. So there were a lot of things like this jobs report, there were a lot of things underneath the headline that were much more encouraging. Remember, the aca wasnt the the Affordable Care act wasnt a jobs bill. It was designed to give insurance for people losing it. Nancy pelosi and some others sold it as a jobs bill. I dont want to let that go by. That was one of the sells and the president himself used that kind of rhetoric. Let me go to john on this. John, if you have a job and you work hard and climb the ladder of opportunity, youre either going to lose your subsidy and or youre going to pay higher tax rates. So that is a disincentive to work. Thats a disincentive to work hard. And i think that hurts the growth of the overall economy. Yeah, well, there are three things the economy is struggling with. One of them is the uncertainty that surrounds obamacare and its implementation. Both were employers and employees. I think thats still there. This hasnt been a smooth rollout at all. People dont know really what theyre going to be spending for health care. And we dont have full information on where its going. But a lot of people that i know are finding that they have to spend more. Secondly, of course, the regulation of financial markets, the dodd frank legislation is still a big problem because banks have gone out of the lending business. And finally we have a lot of disincentives to grow in the world at large. Emerging markets are struggling and so on. Im seeing 2 growth. Im seeing obamacare not helping. And one of the reasons a lot of people said at the start of the year, when we start this year, theres no more fiscal drag, theres no impact of the tax increases and spending cuts that we saw last year. That may be true to some extent. But we still have drags coming from all these regulations i think obamacare is a big drag. I think a lot of these businesses not only because its a disincentive to work, which is tragic, in my opinion, but a lot of these businesses will not make longterm investment because theyre just not sure what the rules of the game is going to be and what the penalty is going to be. But, steve, i want to come back to you on this. Two places where you and i might agree. Number one, in the president s state of the union address, he had a paragraph that called for free trade. Unfortunately, democratic leader harry reid ended all that in the senate. I believe free trade would really help grow the economy. And second i dont know in specifics what obama wants. But sensible immigration reform, like bringing brainiac visas to two or three times the size, letting foreign students remain here, would also be progrowth. The wall street journal editorial page chided republicans for not pushing this. I want to chide everybody. Your guy reid doesnt want to do this, nobody wants to do this this is the stuff of which better growth comes from. I agree with you, larry. I think the president would agree with you. And those are two things that can contribute to Economic Growth. You said something a moment ago that i want to actually agree with as well. If theres a disincentive to work, thats tragic. I think thats tragic but only if its true. So far, i dont think the people who youre talking about, the folks who would be included and covered under the aca have any disincentive to work because they need to work to make ends meet. Thats what the cbo report said. It was very clear. They acknowledged supplyside disincentives with respect to labor. The cbo report also talked about declining participation in the workforce generally which has been going on for some time as a result of baby boomers leaving the workforce. So the question becomes, who is it thats declining in participation . Im not leaving. Is it the lower wage im a baby boomer. Im not leaving. We all want you to stay around forever, larry. Johns got to be a baby boomer. Steve, you may not be a baby boomer. You may be younger. I am. Were all here kicking, working away. Let me add something. Last word, john. The trade issue is very important. Trade, lets face it, i think we all agree on this, i want to emphasize, trade is a president ial issue. The president has to offer strong leadership. The president has to slap down harry reid and say, were going to move ahead here. And i dont see that happening. Theres always resistance. The president has to be aggressive and i think most president s do. And i hope president obama will simply abandon reid on this. Hes got to. Global trade, we have atlantic trade initiative, we have pacific trade initiative. If that stuff rolls forward thats so progrowth, proinvestment, probusiness, projob creation, whatever you do on trade, on exports and the like, youre going to increase the home office. So steve, please tell the president when you see him tonight for drinks or whenever you see him that kudlow it was in the state of the union, he put it there for a reason. But hes got to knock down harry reid. Ive got to get out of here. Thank you very much. The sochi games are under way. So are more security concerns. Next up, the latest on an apparent airline hijacking attempt and much more. Turn around every now and then i get a little bit hungry and theres nothing good around turn around, barry i finally found the right snack [ female announcer ] fiber one. There was a boy who traveled to a faraway place where villages floated on water and castles were houses dragons lurked, giants stood tall, and the good queen showed the boy it could all be real. Avo whatever you can imagine, all in one place. Expedia, find yours. If your denture moves, it can irritate your gums. Try fixodent plus gum care. It helps stop denture movement and prevents gum irritation. Fixodent. And forget it. [ cellphones beeping ] [ cellphone rings ] hello . [ male announcer ] over 12,000 Financial Advisors. Good, good. Good. Over 700 billion dollars in assets under care. Let me just put this away. [ male announcer ] how did edward jones get so big . Could you teach our kids that trick . [ male announcer ] by not acting that way. Ok, last quarter. [ male announcer ] its how edward jones makes sense of investing. The Winter Olympics kick off for real tonight in sochi. But personally i remain very concerned about security and terrorism. Now, today some crazy person allegedly tried to hijack a plane bound for turkey and then take it to sochi instead. Lets go live to sochi for a report from nbcs own richard engel. Good evening, richard. Reporter good evening. Turkish Officials Say this was probably not a crazy person but a drunk person who was on a plane. It left the ukraine. It was on its way to its scheduled destination of istanbul. And all of this was happening just in the hour or so before the Opening Ceremony was about to begin. And during the course of the flight, this ukrainian man whos since been identified, a 45yearold man, told the crew, the pilot that there was a bomb on board and that he wouldnt the plane to be diverted to sochi. Luckily the pilots were quite calm in this tense situation. They told this man that they were complying with him, that they were going to send the plane to sochi. But they didnt change their course. They continued on to istanbul. And in the back of the plane, you know when youre flying in the back, theres the inflights maps guided by the gps, they turned those off so it would make it more difficult for this attempted hijacker to failed hijacker to know exactly where the plane was heading. They were also over the black sea at night so if you looked out the windows, it would be very difficult to identify any landmarks on the ground. They continued to istanbul. The pilots radioed for help. They were escorted onto the ground by two turkish f16s and the passengers were kept on the plane, 110 passengers, eventually Turkish Special forces detained the man, took him into custody, have been questioning him and so far havent found any connections to any militant groups or any particularly unusual or suspicious background. They think he just may have been drunk. But certainly caused a lot of scare. Because it was happening as the Opening Ceremony was taking place as that stadium behind me was full of World Leaders and there were these reports that a hijacked plane was being diverted to sochi. All right. Many thanks, Nbcs Richard Engel in sochi. Appreciate it. Lets get back to the Big Stock Market rally today. The question is, is the correction over . Is there a reason to buy right now . Were going to take a look at your money next up on the kudlow report. Let me talk to you about retirement. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable, professional. Would you trust me as your Financial Advisor . I would. I would indeed. Well, lets be clear here. Im actually a dj. [ dance music plays ] [laughs] no way i have no Financial Experience at all. That really is you . If theyre not a cfp pro, you just dont know. Find a certified Financial Planner professional whos thoroughly vetted at letsmakeaplan. Org. Cfp work with the highest standard. Open to innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. announcer scottrade knows our 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 ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Welcome back to the kudlow report. Another huge day on wall street. Markets posted impressive gains for the second day in a row. The dow jumped 166 points. S p 500 added 24 and the nas spiked 69. Lets go over to cnbcs Courtney Reagan for all the details. Thats the Courtney Reagan. You have to tell us what happened. Today was a good day. And we ended up on the week after all that hullabaloo. I know, decidedly more positive to counter the selloff we had just days before. All ten s p 500 large cap sectors higher to close out the trading week. Health care led the way, up nearly 2 , followed by industrials, technology and materials. Shares of Athena Health surging on their betterthanexpected fourthquarter earnings and revenue saying its network of physicians also expanded by 28 . Expedia shares hitting a record high on the heels of strong quarterly earnings, up more than 14 , subsequently leading the s p 500. Other Airline Travel agencies rose. Theyre all up. Just yesterday, twitter investors were so concerned about slowing user growth that shares sold off 24 . But today was a brandnew day, shares closing up 7 . But its a social split with linkedin plummeting on news that theyre projections are falling below wall street forecasts. I tweeted three times today. Thats something. Thanks, Courtney Reagan. After mondays plunge, the index closed higher for the week. The world is not coming to an end. In fact, i suspect buying on the dips may be a very good strategy. Joining me to talk about it, we welcome back michael holland, don luskin and ed butowski. You have to look at all the numbers. As we said in the earlier segment, the socalled household numbers from which the Unemployment Rate derives was up. And both surveys look pretty good. If the world is not coming to an end, would you recommend buying on the dips or whatever . In a word, larry, yes. I feel a little bit sad for some of my very smart friends who are bearish and have been short a number of things. This past week was not a good one. We had a record amount of stocks sold this week, 28 billion came out of equity mutual funds this week, a record. As you said and Courtney Reagan just said, the market was up on the week. During that time the 28 billion was sold, apple went out and bought 14 billion worth of its own stock during the same period. This is a pretty scary thing for people who are short the market. Shorts didnt pay off. Don luskin, to you on this point, its funny, all the groups for the week, the groups that were leading were cyclical groups, implying future Economic Growth is going to be just okay. Now, theres a view and i heard it tonight already that this market went up today because the job numbers were so bad that the fed is not going to slow down its bond purchases. The fed will not taper. Don luskin, do you buy that macro argument . I dont buy that at all. Ben bernanke gave america a great gift on his way out. The bernanke fed tapered twice, two tapers makes a trend. The bar is going to be very, very high for janet yellen not to continue the tapering regime put in place by ben bernanke. Besides, there is now virtually a unanimous consensus among the board of governors and the regional president s and the fed that while it may be a good idea to keep the fed funds rate at zero well past when he hit the evans rule target after 6. 5 that asset purchases have outlived creating speculative risks for no gains in Economic Growth momentum. Theyre all risk, no reward, they must stop. Doesnt mean the fed is going to suddenly get tight. But the asset purchases are over and thank god because the last thing we need is a central bank leading us into this world of unknown unknowns of the Worlds Largest Balance Sheet of the central bank that controls the worlds currency, that risk is thankfully off the table. But theyre known unknowns. Thats my only disagreement. Ed, i argue that profits are the mothers milk of stocks, not real gdp, not the household employment, not nonfarm payrolls, but profits. Productivity is rising, unit labor costs, which is about 70 of expenses, is actually falling in the aggregate and prices are rising a little bit. That tells me margins are okay. That tells me stocks are okay. Yeah, theres two ways to look at stocks. Technical analysis, fundamental analysis. Technical analysis, stocks will whipsaw all over the place. Technically, the market doesnt look great. It didnt really break out above where it was at a previous level. If you look at the trend line, its wonky stuff. But fundamentally, earnings revisions have come down. These numbers that are coming out that are beating the estimates, its important to remember, theyre beating estimates that have already been lowered. Fundamentally, the market is looking out six to nine months. Im going to disagree with mr. Holland. I dont like the way the market looks in the long run. The genius of investing is recognizing the direction of trends. And you can see it, you can smell it in the air. Things are starting to get sour in this stock market. Its a sign of age and maturity when the panelists call you mr. Holland. I love that. So let me ask you what you think about eds rip, snorting attack on your opinion . Let me start with what ive learned over the years to say, he may be right. Having said that, i wouldnt bet that way. With all due respect to ed, i think that we now have over 300 companies who have reported this quarter, not particularly good quarters, weve seen from the global numbers, we actually have several Percentage Points of growth in earnings. Doesnt mean the economy is greater. Its okay for companies to continue to watch their expenses, to grow the top line a little bit. Its happening i was in asia a couple of weeks ago. The same thing is happening there. Theyre slowing down but theyre still growing. So we still have growth. I think that when we get to the end of the year, if nothing horrible has happened, the world keeps looking for bad things to happen, if nothing horrible is happening, i think were going to get confidence back, people are going to start growing businesses, growing their jobs. The mothers milk of cash flow is happening. Well, okay, growth, i dont know. Im still in the 2. 5 camp. Don, i have two questions for you. China, question mark, and turkey, question mark. Any thoughts on those . Those are pivotal areas. Chinas probably going to be fine. Turkeys an interesting problem. Turkey is knocking on the door of being europe, right . They were on the verge of joining the Euro Currency union. Now theyre having political problems that are going to keep them out. Thats a terrible problem for their globalization efforts. But look during this correction where things have been so bad in Global Markets and everyone was looking at emerging markets currencies, especially turkeys currency and saying, oh, my god, its contagion, its the asian flu, turkey is right on europes door. And the bestperforming stock markets in 2014 have been italy its up for the year, spain, the very best performer of all, greece. If there was some kind of problem emanating throughout the whole world from turkey, theyd be the first to die. The great thing about this china kris, emerging market crisis, turkey crisis, ukraine crisis is its proving that the world is immune from contagion. When we get that lesson, you can start getting mr. Hollands growth story. Luskin is on fire. Hes good tonight. I have to leave it there. Don, thank you very much. Ed and mr. Holland, appreciate it. Now, the nonunion righttowork south has been a haven for good autojobs. But volkswagen is colluding to change the rules. And it sparked a hell of a battle in tennessee. A senator, a governor and Grover Norquist against unionization. We have this bizarre story and grover up next on kudlow. Fifteen minutes could save you fifteen percent or more on car insurance. Yeah. Everybody knows that. Did you know there is an oldest trick in the book . What . Trick number one. Lookest over there. Ha ha. Madeest thou look. So endeth the trick. Hey. Yes. Geico. Fifteen minutes could save you. Well, you know. So ally bank has a that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. You want everything. Orks an expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Labor has built the middle class. And theres a reason why the middle class is shrinking. I know i got in trouble for saying this before but im going to say it again. You guys are the only guys keeping the barbarians at the gate, man. He forgot to tell you that i think the labor force has gone down from like 50 to 7 of the private workforce. But anyway thats Vice President joe biden. Barbarians at the gate, really . What about the thousands of unionfree jobs created by the influx of new foreign auto plants in righttowork states like bmw in south carolina, daimler went to alabama and volkswagen went to tennessee . But hang on, volkswagen is now colluding with the uaw to unionize its chattanooga plant. And get this, they want to set up some sovietstyle worker council. Somebody should tell tennessee is not the soviet union. Here now is chris kofinis, Grover Norquist and tennessee labor attorney mori nicely. Comrade norquist, i understand youre trying to stop this sovie sovietstyle worker council. What in hell is volkswagen doing . Volkswagen is a German Company and in german the union leadership, the union bosses actually sit on the board of directors. So theyve been pressuring volkswagen to oppose the workers in tennessee. When west coast vagen went to tennessee, they got 500 million or more of taxpayer dollars with a promise that they wouldnt throw in and bring the uaw, not auto workers, the detroit labor unions that have done so much damage to detroit and other cities to bring that to tennessee. And now, of course, volkswagen being pressured by its own unions in germany to throw in with the union bosses and not allow workers to hear the truth about what unionization has done to the Auto Industry and auto workers and to unemployment in other cities. And theyre doing this in an area paid for with u. S. Tax dollars. Its a real problem. Youre running, as i understand it, 13 billboards, thats what i read in the paper. Youre also running some radio ads as well. Yeah. Mori nicely, can this be stopped . I wanted to ask you, can this be stopped . I want to ask you also, is this one of these ambush elections which the National Labor relations board, which is taken over completely, they want ambush elections, is this one of them . We think it is. This is a situation when they announced the elections ten days until the election. And we have really been scrambling to respond to the information put out by the uaw. This is one of those unique situations where vw has allowed them to have unfettered access to its facilities by the uaw. At the same time, other groups with competing viewpoints have not been allowed access. Supervisors cant share their experiences with their workers and workers have been told, youre not allowed to ask questions. This has created a very unique situation. Were trying to get out there and make sure that employees, team members at volkswagen have all the information that they need so they can make a reasoned, informed choice, not one based upon the single viewpoint allowed into the facility. Chris kofinis, is the Obama Administration directly going to get involved in this . He has his National Relations board i want to know if the president and Vice President are going to go down to tennessee . The governor and one of the senators is opposed to this. I dont think theyre going to get directly involved. What is clearly happening here and i do find it amusing that you have grover and others basically saying to a company that is pretty successful when youre talking about volkswagen, what their strategy should be in terms of dealing with their workers. At the end of the day, theres going to be an election and decided by the workers, in terms of where they want a union or or not. Volkswagens decided, lets have a reasonable dialogue in terms of that process. It could have been very different as weve seen in other situations. And the workers are going to end up deciding one way or another. But to suggest that theyre going against their own corporate interests, i find bizarre. This is a Successful Company thats done really well for itself. Volkswagen is doing well. But we saw it with general motors, with chrysler and other companies who put labor leaders on the board and helped bring down the company. Theyed ha they had no backbone. This symbolically at the least is going after the south, which is mostly righttowork and nonunion. Thats why the stakes are so high. And i want to know your political assessment. Can this be beaten . I believe it will be beaten, it can be beaten. The challenge is, of course, that obama is in chattanooga because his nlrb appointees are the ones setting the rules which disenfranchise the workers of chattanooga and are putting the guys who destroyed detroit and destroyed gm without the tens of billions of dollars of bailout theres not going to be a bailout forvw. If the uaw does to volkswagen and chattanooga what they did to detroit, no bailout for them. This is very damaging. Grover, its nice hypoably. But you can blame that the contracts should have been better and blame the workers all you want. But at the end of the day, there were bad decisions made in terms of the cars produced and other management decisions. You can sit there and focus on that its the workers fault, the unions fault. Its an easy thing to do. But in the case of what were talking about here in the volkswagen situation, you have a company thats decided to work with the union to see whether their employees want a union. The companys decided to screw the workers. Thats a democratic right. Theres nothing democratic about some people pushing other people around. 51 of people dont get to tell the other guys who to do in the workforce. Thats in politics. I have to get out. But i want to tell you this, ambush election stuff from this nlrb, this is really bad stuff. Well see. Chris kofinis, maury nicely, grover nyquist, thank you very much. What about the money at the sochi games . Were going to talk about what the games are costing the russians and what they might bring in next up on kudlow. Ce] the new new york is open. Open to innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. Were open to it. Some Brokerage Firms are but way too many arent. Why . Because selling their funds makes them more money. Which makes you wonder. Isnt that a conflict . Search proprietary mutual funds. Yikes then go to e trade. Weve got over 8,000 mutual funds and not one of them has our name on it. Were in the business of finding the right investments for you. E trade. Less for us, more for you. The funds prospectus contains its investment objectives, risks, charges, expenses and other Important Information and should be read and considered carefully before investing. For a current prospectus visit www. Etrade. Com mutualfunds. Sleep trainsor president s day president s day sale is on now. Save up to 500 on beautyrest and posturepedic. Get a sealy queen set for just 399. Even get 3 years interestfree financing on tempurpedic. Plus, free delivery, setup, and removal of your old set. Keep more president s in your wallet. Sleep trains president s day sale is on now. Superior service, best selection, lowest price, guaranteed. Sleep train your ticket to a better nights sleep opening ceremonies of sochi olympics are tonight. And so far, most of the talk has been about the very real threat of terrorism and the gross hotel conditions. But there are also billions of dollars at stake. So lets talk about this story. We welcome forbes executive editor michael ozaney. You know a lot more about this than i do. Give me the general theme. Hows russia going to do this, the International Olympic committee do it and hows nbc going to fare . Russia is not going to do so well. This is the most expensive olympics by far, even adjusting for inflation. Its going to be about twice as expensive as japan was in 1998. Its a vanity play. Its hopefully, from putins standpoint, brand building. But theyre having a lot of problems. I want to come back to a bigger problem. How about the International Olympic committee which has a very i think youd agree, a very mixed reputation. Theyve got the lions share of the money, as i understand it, and they disburse the money. Walk us through that and can we trust them . They have a good record of disbursing the money, they have to by regulation disburse 90 of the money theyre going to take in. Theyre going to kill it. This cycle is going to generate more money than any other cycle. Even with that huge amount of cash going to russia, its not even going to cover nearly a tenth of the cost of the olympics. Does the International Committee back russia up, do they finance russia in effect . They finance this Olympic Games right. So the 51 billion to russia is covered by the International Olympic committee . Only a tiny portion is because this thing went way over budget. You have things like rail lines being built and so forth and things like that. So russia is not going to recoup its costs. For putin, this is about putting on the russian brand and how great things are in russia supposedly and so forth. But as you know, a lot of these athletic teams have even brought in their own security teams. Nbc has sold i think a Record Number of ads, is that true . Thats right. Over 800 million in advertising sold. The previous record was the last Winter Olympics in vancouver which was about 750 million. And theyre going to kill it on their digital platform. In the london games, 60 million in ad revenue on digital platforms came in. That was a triple of what they did in beijing. And i think theyre going to have equal success this olympics. Invested heavily. Nbc, its not a separate company, but youre bullish on the nbc absolutely. Bullish move. They took criticism when they went live with everything. I think theyve proven to be absolutely correct with that move. Look, i dont know the story on the ground there. Never been to sochi. I havent been to russia in years. Used to spend a lot of time in moscow. Havent been there in years. But from what i hear, terrorism may strike. May not in sochi, but the chechens and al qaeda may strike in other parts of russia to distract and cause attention. And putin who says hes on top of this stuff has not in the past been able to prevent them. What is the terrorist story . I think youre absolutely right. My personal feeling about this i remember as a kid watching the olympics in munich in 1972. And that unbelievable tragedy when the israeli athletes were murdered. Its over 40 years now since weve had Something Like that, thank god. I just get the impression that the ioc has kind of forgotten about that somehow and put that on the back burner because thats a very real concern. And i think you said it earlier. Each country is now being responsible for its own security, not leaving it up to the ioc. Not at all. The athletes there are saying, i wonder if im going to be safe. You want them concentrating on their event. Thats why theyre doing this. Many thanks to michael. Thats it for tonights show. Thanks for watching. Cnbc will be your curling headquarters throughout the sochi games. The kudlow report is taking a twoweek break to work on our curling game. In all seriousness, ill be back making commentary and analysis on the network during the games. Our show will be back on february 14th. Enjoy the games, be safe. See you soon. When you order the works you want everything. An expert ford technician knows your cars Health Depends on a full, complete checkup. The works. 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