you will use fiscal stimulus as washington insist, i favor extending the cash for clunker car rebate program. start slamming me or take it out in the e-mails or wherever. in brief, the clunker for cash program has become a national pastime everyone is talking about. people are flooding into the car dealers there, even buying used cars if they can't get a new one. the consumer spirit needs this boost. this government money actually leads to car purchases, not just welfare type transfer payments. it will create more production, more jobs, better incomes and higher tax revenues, and, heck, it's a mere $2 billion and compare that to the trillions of wasted dollars washington has already thrown around the country and add up. i think this is a bargain basement deal that is actually going to do some good. so there. i know you will slam me, i'm supposed to be a free market

capitalist, i am. but sometimes no good deed goes unpunished. a foolish consistency is the hobb goblin of little minds. i think the new market will be helped by improved consumer spirits and that will result from final passage of this clunker program. better car sales will help. we might even create a new job or two for the american work force. you know what, this horse is out of the barn, i say leave it out, people are talking about this everywhere i go, i am convinced it is the right thing to, do even though, yes, it runs against my pure iist capitalist principles. sometimes that happens. let us proceed. first occupy, speaking of the new bull market, i think it's headed to pre-lehman levels, over 1100. let's go to rebecca jarvis with the full earnings report from earnings central. you did it again, stocks rose across the board. >> it was all me.

a couple issues working in favor of the bulls. first, you have fund buying. july was a huge month. there are funds that weren't in the game at the start of the rally. from a benchmarking perspective, when you look at the month of july, they cannot afford to miss another leg up in this market. the last few weeks has been huge. if you're reading the market as a second leg up coming, there's a problem there and from a technical read, the markets want funds to come in. on top of that, the shorts, they have failed numerous times to sell down the market a handful of times in the last week. momentum is not on their side right now. where we are seeing momentum in the asset allocation, in the interest rapt sensitive stocks. look at the reed in connection. the highest level since july. the reit index. a lot of people are underinvested. the appetite for it because fund managers are looking for places

to put in capital that have not already seen the multiple expansion some others have, for example commodities market. we're seeing the same thing in broader financials, big regional banks, zion, huntington bank. and cit. these banks can be more profitable down the road and yet to see the likes of zions and huntington, yet to see the multiple expansion and overarching theme. look at caterpillar. they hosted their annual meeting today and they had a bullish outlook. for 2012, cat is looking at big improvements, two times boost in revenues and six times boost in profits and the stock getting a bump today and obviously some of that boost in profits will come from the cost cutting. right now, what we're seeing in terms of the boost, larry, in

the overall market is buying on the dips right now. obviously, that jobs number on friday will drive a lot of things. before that -- >> if you're worried about a correction and pullback, the jobs number could do it. >> i don't know. the street says we will lose 3,000 jobs. if it's worse, there's your pullback. if it's less, there's your 1050 on the s&p 500. >> the 1100 is an important level and a lot of traders are following that as the next leg up. >> i'm telling you cash for clunker, 1100. rebecca jarvis. great stuff. another important story today. are some traders corrupting this great new bull market. cnbc mary thompson has the full report. >> hello, larry. earlier there was word from washington suggesting an sec ban on so-called slash trades was imminent then mary shapiro said

no so fast. they plan to eliminate the in equity resulting from flash orders but the ban needs to be made first and then public comment. they trade on early orders with speedy computers. a broker slashes and order in return for liquidity feechlt a opponents say it gives traders an opportunity. >> they're wrong because the customer chooses to put the flash order in. >> they say opposing flash orders because the end customer may be disadvantaged if that broker dealer doesn't share the liquidity fee it receives. because only select traders get to look at the orders, the big board maintains it creates an uneven playing field giving traders information they can use to their advantage both on that exchange and others. if you put in a public towards

buy or sell a certain stock, it may be the same as slash order and won't be fulfilled because a selected order may act ahead of you. they say it's a question of surveillance as well as allowing these slash trade is in the future. the sec looking at this as part of examination of high frequency trading and dark pools, this is a subset of it. what will regulators do about high frequency trading which sec says maintains liquidity in the market. >> i'm moderately confused, not out of the ordinary state for me. senator says this will be band but shapiro says not so fast, senator schumer. >> if you know anything about proposal, the commission has to approve a proposal and put out for public comment three to six months. doesn't happen overnight, not like they snap share fingers. >> will they actually study it.

>> in her statement she asked her staff to look at flash trade, part of a broader investigation into high frequency trading and looking at those dark ones as well. >> wee appreciate it. >> now, to our ace traders, get speedy high traders. we have cnbc analyst ferry and jim. and contributor and director at tjm institution services. what's your take on fast trading? is this corrupting the new bull market or what? . >> no, it's not. it's mostly a non-story and have to decide whether it adds or taking liquidity away. to be determined. if mary shapiro's group will look at it over time, hopefully come up with the right answer

over time. i don't think much of it. >> people tend to blame this and everything else in life on goldman sachs and they issued a release today, no, we didn't do it. what's your opinion? i've now heard all 16 sides and probably just as confused as when the story broke around midday. >> they will do something, larry. they should look at the futures market, we don't do it there with a stad of regulate iing ourselves and they work. i think they will end up with some type of adjustment and hatch to tread very carefully. anything that makes the market ve change in this infancy is not good. >> and those thinking of getting in this new bull market i proclaimed last week, are they concerned? should this be corrupted? how do you come out on it.

>> the question is how much rig is it? not enough to push you away from the stock market. >> do you think it's a little bit rigged? i don't like a little bit rigged. >> neither i do. the big people always have better platforms and faster system. everything rigged in your favor if you're a big player. not necessarily goldman is the evil empire, it's rigged but if it's only rigged this much shouldn't preclude you from jumping in. >> i hope being a little rigged is not like being a little pregnant. i have to think about that. i have to go back to kevin. i had this wild and crazy thought. we broke 9300, held our ground nasdaq and s&p 500. and looks really good to me. if you disagree, you disagree. we had a lot of news, cash for clunkers is going to go through, republican opposition seems to be dissipating, senator harry reid says he will get it through before the week is out.

is it possible consumer spirits want to see it go through, they're flooding the dealerships and giving everybody a lift in their psyche and therefore good for the bull market. that's where i want go. clunkers good for the bull market? what's your quick take? >> i think it's worked from a psychological standpoint. hard to quantify it. the only thing i would say, if you're going to get stimulus that works in this fashion, it puts the fed in a tighter spot. they have rate structures in an emergency situation and clearly with the market doing this well and policies like you're advocating continuing, the fed has to address coming way from an emergency situation and back towards something more normal. >> $2 billion, it will be gone in about 12 days if they can get the record keeping right, that's the only thing. jim, to another one. >> i'd like that one, i'd like to take a swing at that one. >> go ahead, take a swing. >> i hate cash for clunkers with

every fiber. it's funneling money to an area already proven to not compete blood samplely. it's bad industry right now. why not cash for computers or bucks for bicycles or some other rand random business? . >> you are right. i'm a free market believer. you are totally right. i am totally inconsistent on this because we let the cat out of the bag. i don't believe it will go to school kids to give them $3,000 to shop before school. i think this is it. once you start these things, this is what the country seems to want is what i'ming. >> i because of the inefficiency of our government to funnel money in things, we have to do it? i guess you're right. >> it's better than the crap they've been selling us the last year. this is bipartisan crap, crap from republicans and democrats, all we've done. total garage. >> but it's the first piece that actually saw some definitive

positive results. >> you're actually purchasing goods that will create jobs and tax renews. i need a little more time with these two distinguished gentlemen. kevin, talk to me about the investment trust today. and the bears, they obsess about it, tell me to sell banks, sell stocks, sell america because of commercial real estate. the fact that they're rallying is that an a sign of economic recovery? is that what drove up the bank, the best performers today. >> you have to watch it. i was just talking to my friends at ubs earlier. everything else had already moved and kind of went to the widows and orphans here. i'd like to believe there's a fundamental story. it seems to me they moved to the sectors not kept up with the rest of the market. you have to watch it. i wouldn't necessarily be moving money that far out into the risk

curve just yet. >> fellows, do me a favor, stay with me. i have to take a commercial break. i have producers screaming at me bad enough you're now for federal spending for cash for clunkers, now, you want to break through the commercial bloirks can't do that. we're a profit maximizing program in a profit maximizing cnbc network. please statement we'll come right back to you and in addition, cash for clunkers, just the right stimulus for our economy. we will ask leading republican tom coburn if he will sign off on the billions to keep the showroom traffic flowing. i think he will not, think he will slam me and look forward to it. and get your pencils read dirks we' , ready. do you play the speculative play or get ready for a huge pu pullback? me? i think the pullbacks will come

and stocks will roar. and i think it's something for the psyche and spirit. something this country needs. we haven't had a lot of spirit lately. we are "the kudlow report." we'll be right back. undefeated professional boxer floyd "money" mayweather has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free.

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welcome back. the dow broke through here 9300, a very important benchmark as i termed it last week. the s&p stayed over 1,000 and nasdaq, over 2,000. we're back with kevin and jim to finish up our conversation. jim has read me out of the free market movement. jim, you're right but sometimes i'm inconsistent. go ahead, you won't be the first or last. i want to ask you a hot question among everybody is when there is a pullback or correction from this splendid rally. the best i can determine, this thing is now about 14 1/2% across the board for the major indexes, it's been pretty much non-stop. what's your thinking about pullbacks and corrections? >> there will be a pullback, there is in every market.

remember what fueled this rally over the last five months a weak dollars, generally inflation trade and why commodities and minors and metals the leader. yesterday, the dollar made new lows against the most important currency, canadian and not the most important in this equation. if it goes back above those levels yesterday, that happens when i will get out of mine. even if it's bull market. that doesn't predetermine where we're going for eternity. there might be 5, 10% corrections involved today. i do like the weak dollar today and the fact late money is coming in each day to. me, it seems like there's a lot of money on the sidelines, predominantly at the end of the day, the market closes strong, indicative of a bull market. >> you're watching the dollar, you see a strong dollar and then see a pullback? >> if i see a strong dollar, i will sell out and i think a pullback is coming because we

love the weak dollar. >> kevin, you have a thought on the dollar trade regarding the pullback, a very interesting set of reasons from jim. >> it is, i think jim is definitely on pulse where the money is flowing right now. i would put it to you this way, they said secretary geithner had an expletive filled tirade about re-regulation. he should be having an expletive tirade about the way people are treating his currency. i don't think the country can continue to think the equity market will rise as we debotch the standards. i would like to see pullback in the dollar, that the stock market actually likes, and ththe then -- [ >> will that happen. >> then i think you will be on -- certainly not on the first day, jim, i think you're right. i think that would be the key to your theme, larry, we're embarked on a bull market much more substantial. >> my problem is i could get us, in my vision, my scenario, i

could get us to next spring, i don't know, maybe next summer, i can get us to 1200 on the s&p. i can't get us back to the old highs because there are too many threats, the old high close to 1500 on s&p and 14,000 something on the dow. i can't get back there because there's so many threats coming out of washington and so much political uncertainty. when you talk about the weak dollar, i understand the risk trade, people move out of dollars into other currency, in the long run, isn't kevin right? in the long run, if we have a chronically bad dollar, really, thick undermined george bush's presidency, isn't that a big negative. >>of course. if we have a cascading dollar, people start to lose faith and transfer it to other wealth rumored a little bit ago when china was stockpiling things. that's eshl terrible. the long end of our treasury curve will get hit because that's stored globally, that will be a disaster.

i'm talking about a slow grinding dollar we have a cap on. instead of that, i think that's a huge problem. >> when do we get to 1050? >> i think it is possible this week. >> this week? >> if you look at earnings season, every analyst, you know, didn't want to be fooled again, so had terrible earnings predicted, so it was easy for the street to beat. let's move that over to unemployment, we have the unemployment numbers on friday. to me, it seems logical every analyst will not want to be fooled again by this so estimates will be too low. it's easy to beat friday when unemployment figures come out. >> kevin, fast lightning, last word, when do we get to 1050 on s&p? >> that's above my pay grade but i would say make sure tomorrow adp comes out, larry. if we hit a good number, the market has to keep liking it. the traders are not going to want to see the market fail

after good news. >> jobs are the achilles heel of my recovery story. this is very very important. kevin and jim, thank you. you're terrific. >> president obama held a powwow at the white house with senate democrats today, i guess he forgot to invite the republicans. however, we have invited cnbc hampton pearson to give us the inside scoop. hello, hampton, cash for clinkers, cash for clunkers, what do you make of it. >> clinkers or clunkers, president obama summoning the democrats to the white house dachlt they emerged after a pep talk from chief and harry reid saying the senate would add legislati legislation, adding billions more for the cash for clunkers this week. the real focus of that white house meeting was to brace lawmakerses to face the wrath of voters over health care return when they return home on the month of august. majority leader harry reid said

the president fired them up. >> the president didn't get one standing ovation but several of them. he was really kind of reminded me of the days when i was an athlete. and the coach was giving you a pep talk before the game, you came out of that pep talk that the coach gave you, ready to take on the world. >> got to love it. lawmakers expect to get an e earful about insurance plans and the federal deficit and white house recovery and when it comes to health plans they say some groups are manufacturing that anger. >> so they buy their way out of anger with cash for clunkers. >> short term gain, long term debt waiting for generations beyond. >> you're totally right on that one. one last one. senate republican leader mcconnell, sounded like from his statement today, the republicans will not damage or stop the clunkers from going through. >> kind of looks that way.

again, everybody's looking to see does the senate go along with the house formula or on paper at least, how you pay for it. >> hampton pearson, thank you so much. up next, we'll ask leading republican tom coburn if he'll support billions more for the cash for clunkers program. i have a feeling he will not. i have a feeling he will tell me why i am completely wrong and out of my mind and therefore we are still "the kudlow report." we'll come right back as we talk about cash for clunkers. i think it's a market thing as well as recovery.

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if i want to try combine the new bull market and economic recovery with cash for clunkers. waiting in the wing, senator tom coburn a truly great american that will tell me why i'm completely wrong, which will be great fun. let's look at the auto story. we had a big move up in the month of july. 11 thus -- 11 million 400 car sales if my numbers are nearly correct from something like 9.8 million the month before. a couple hundred thousand clunker is not responsible for this. is there something going on. the consumer is beginning to do a little spending, at least for automobiles, maybe replacement, i don't know, to jump from 9.7 or 8 million to 11.4 million

cannot be explained by somewheres between 150 planned 250,000 clunkers. no way jose. now, here's another one. on this clunker story, the report today in the "wall street journal" showed that people are going to the dealerships if they can't qualify for a clunker, they buy a used car. how about that? they're all revved up to do something, go over, thousands of people are flocking to these dealership, i think they're attracted to the cash for clunkers. look what's going on, this is what's so fascinating. used car prices have had quite a run. this is a sign of a better economy a sign of better car sales and better car production. it is a big positive. from what we know, department of transportation numbers, here is the trade-in tally, let me underscore that. this is what we know, may not be the whole story.

so far, the average fuel efficiency of the trade-in, less than 16 miles a gallon. average efficiency for new purcha purchases, this is a very important number, 25 miles per gallon. the greenies are happy with this and economic stimulus people are happy with this. what you're left with is 61% increase in the fuel economies, people like that. 83% are trading in their trucks and the last one is 60% new purchases were cars, ford focus, the top selling car. ford focus, i think that's the last one. no. we've got some more. here is the unofficial tally cash for clunkers sales. the top five sales, focus, corolla, civic, prius and camry. it's what people seem to want. that's the deal. see if we have any more? no, that has the whole thing.

bottom line, people are taking to this, i want to see if it will get through the $2 billion increase in appropriation. we're joined by one of our all time favorites, senator tom coburn of oklahoma. senator coburn, you will slam me, i will love this, the most important self flag you golation exercise. earlier in this show, i came out in favor of cash for clunkers. i figure if we're going have fiscal stimulus, this will work. how will you vote on this when it comes up the next day or two? >> i'll vote against it this time and vote against it the second time. no question some of it is stimulus and most going to japanese economy and most dealerships shut down for ten weeks and most that had this, don't have many cars on the lot. i can slow it down but no reason to slow it down.

>> what about the trade issue. some of these cars are made overseas in japan. >> the prius are all made overseas. >> fords are made here and honda civic is made in indiana, is it not. >> wait a minute. a portion are made here. lots of parts not made here, shipped in from a japan. the component from america is 50 or 60%. the fact is it's not just stimulating here. the question is, is this better stimulus than anything else we did other than roads or bridges? yes. >> that's my point, sir, that's exactly my point. >> it's a very unefficient stimulus. number one -- >> it's faint praise, i agree with you. what about the public psyche? the consumer spirit? i'm sure everyone in your office is talking about cash for clunkers? >> we're only talking about how we could make a good amendment to be very painful for home to vote against. think about this. where does it stop? why not the boat industry?

it's on its back? it has 80% of their employees in this country in terms of making leisure boats and boating for lakes and streams, why don't we do it for the boats? why don't we do it for the appliance makers? why don't we do it for them? they laid off people. where do we stop? what we should have done -- >> why don't we give kids going back to school shopping $3,000 each to shop. >> and one of the amendments that got voted down, why discriminate against somebody in a certain class that can afford to buy a car and trade in a clunker, why not allow everybody in this country to have the option to have stimulus money to use it in the way they would. >> i agree. >> $2690 every man and child this country could have gotten from this stimulus bill would have bussed the economy like crazy and they would have made the decision what they bought. >> we could have had a total income and tax holiday for six months would have been better.

the cat's out the bag, everybody's talking about it, the national pastime and consumer auto buying spirits are soar, why can't we let it go through and say, okay, enough is enough. isn't that what's going to go through. >> it may go through but because of the incompetency of the transportation department we may have already reached $3 billion. >> 3 billion dollars? >> absolutely. we don't no. those are the one this is an agreed to. that doesn't mean all the applications have been processed yet. we could very well have already finished the $3 billion already. >> i hadn't thought of that one. i hope you're wrong. if you are right, they will probably add another $2 billion and make it five. >> that's the problem. when does the next cash for clunkers come because we're buying forward sales. >> aagree. you're stealing sales. uncle sam owns general motors so we're paying people to buy cars from gm so we're really paying

people to pay ourselves. that's a little weird. i'm not thrilled with this, snoort it doesn't match with good macro economics or microeconomics. >> i agree and i think it's good for human spirits. a one time stimulus is not the worst thing in the world. >> no, it's not. >> i see i can't talk you into it. and i know it's not and senator coburn, you didn't disappoint. thaw for coming on "the kudlow report." >> and looking at investments, what to buy and sell and even have a pullback and even talk about the kudlow caucus. i think my own caucus disagrees with me about cash for clunkers, most right thinking people do. i'm staying with this. i think it's good for consumer spirit and will work in a limited way. i think it might sell more cars and create a few more jobs and might increase tax revenues. and they will tell us whether we

should go recovery cycle or -- and jim is the most bu bullish guy and when you ask him, the most bullish on the dow goi going. >> i'm sticking to my guns a little stimulus the right way to purchase these cars just for a few more weeks will help our whole consumer spirit psychic bull market recovery story. i'm larry kudlow. we'll be right back. rfr ecovery

it's time now for the kudlow caucus. i think the public likes the cash for clunkers program. i personally do. what does the caucus think? should the government refuel the cash for clunkers program. 12 members voting, look at the results. eight said no and only four said yes. to see how each member voted and wirks head over to kudl kudlow.cnbc.com. i have distinguished people right here. let me go right to the set. jack, "forbes" magazine, yes or no this question?

>> yeah. >> why? real quick. >> the consumers' confidence needs a shot of adrenaline and i think you're right on that. if you replace something else like stock, we are reward it. the tax laws carry forward. >> hold on, we will dig a little deeper. i think this is bullish for the stock market. wendell, do you like this cash for clunkers. >> absolutely. that's exactly what we should be doing. these numbers will show up in economic activity in the third quarter and good not only for the economy ultimately but investor psychology. >> tell me why you hate it? i know you do. come out of hiding. >> i hate it because i believe free market capitalism is the best path to prosperity. >> hoisted on my own petard. >> what did ralph waldo emerson say. foolish consistency is the hobb goblin of little minds. sometimes you have to go

populist. >> it's a sugar high, scripted by or well. >> scripted by orwell. thank you for that. i will not give up on this cash for clunkers. i really believe this is part of the bull market story. we also need to know, what about the pullback and job numbers later in the week? do you stay with the recovery sectors that bring you to this rally or switchback to defense. please stay with us.

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- ( rock music playing ) - and tom is streaming meeting psych-up music from meltedmetal.com. that's happening now with the new mifi from sprint, the mobile hotspot that fits in your pocket. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. let us reintroduce in a more formal way our experts. wendell perkins. jim lacamp, who hoisted me on my own petard. senior vice president and portfolio manager at macroportfolio advisors and back gage, associate editor at "forbes" magazine. wendell, let's move on from the clunkers. you're really a super bull right now. let me ask you, i'm with you up to a point. can the s&p 500 get to 1100 or maybe 1200? can the dow, which crossed 9300 today get to 10,000, 10,5,

11,000? how bullish are you in this rall rally? >> making those kinds of predictions is nearly impossible. it can see the s&p certainly getting to 1100 by the end of the year. we will see starts and stops. this market will remain volatile. i think the perspective is that the economy has turned the corner, we are seeing across the board better economic news. i think that will continue, will keep people in stocks there. is still tons of money that has missed this huge rally that will continue to work into this market and the earnings will begin to show real good year-to-year -- >> 400 s&p, 500 companies reporting, 75% beat expectation, that is pretty close to a world record. i want to add to that, tremendous tremendous drop in corporate bond yields relative to treasury, the libor rate is minuscule and the spread is min skuchlt it reminds me of pre-lehman before the collapse. can we get to pre-lehman stock

levels. that's what i'm looking at here. >> absolutely. >> that's what wendell is suggesting. >> i absolutely believe we can get to pre-lehman levels despite the destructive policies the obama administration is pushing for. the next big thing that will be a positive sign for the economy is see health restored in the consumer. we saw income numbers today lagging. i think if the consumer credit market can start to recover as well as the small business credit market, those are the things holding back a full-blown recovery. >> jim lecamp, the sector you hate, banks were leaders and the other area, real estate, did very well with the real estate investment trusts. if you ask me, find a bank you hate and buy it, even a banker can make money with zero interest rate and steep treasury curve. are you still shying away from  banks? they're booming? >> i'm shying away from regiona

banks. a bank can make money doing tha a monkey can make money doing  that to. get the equation right, you hav to lend money. look at the deposits of federal reserve, they're not lending money out to consumers or  commercial real estate at all and commercial real estate loan quality is deteriorating rapidly. >> why do you think they did so well today. kem coe, apartment management and investment, why did they do so well today? are we, too, obsessively fearful about commercial real estate which will improve as the economic recovery begins in the third quarter, mr. lecamp. >> larry, i will throw you a  bone here, one of the most  positive things is housing stock is much better. i look at the housing chart on the index, if it breaks out, it will leg up higher. i still think it's a bear market rally but could go up 1100.

>> what's your favorite. >> industrial cyclical, you get a huge earnings bang for your wa buck? >> are those homegrown? international, china. >> certainly if you want to play it safe. >> your link. >> dow chemical, not linked to asia but 60% of its revenue is outside the u.s. and has 100% earnings growth. people will pay money for a spot like that. now to dennis kneale in the next hour. hello. >> we're seeing america this is one leader of the world that can lead us into a far better recovery than you think? did someone on my show last night call obama a liar on health care? he says no. we'll look at the videotape and figure out which side is telling the truth. >> is that tax americana or tax

americana. >> it's tax americana unless we go into t as tax americana. >> we'll be straight back after this. so, what's the problem?

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we are back with our investment gurus. commercial real estate, the most obsessive by all the obsessive by the bears. knew mentioned before they had a

big day today. >> wait. i have to get the info out. my bad. up 5%. the reit index up 5%. >> they had a big day and we heard all the doom and gloom about commercial real estate, you look into what it is, it's part of my consumer comeback story, i think stores bike target and other big box retailers, some of it and other portfolio portfolios will come back in the next couple of months. i think that will underpin recovery. >> wendell, you agree with that? you're not really in on that. >> i'm very suspicious of a consumer recovery. it will be there but over a longer overhaul. there's other things you can play. industrial, department, health care. hurt pretty bad lin this downturn and also have great recovery opportunities. you can back away and not have the office space exposure where all the concerns seems to lie. >> do you think business will

lead us out of it? cost cutting old-fashioned free market capitalist to profitability? >> i don't see how the consumer can possibly lead us out of this. >> you mentioned dow chemical before. give me another great pick. >> another we like is international paper, much more domestic driven company. >> beat the street. beat the street. >> absolutely. this company trades at about five times its cash flow, as a value guide is exciting. they also created $1.3 billion in free cash flow in the second quarter, which was probably the trough. >> whatter? give me another name. i'm fascinated. big business names. >> eaton, exceptionally high quality. >> what does eaton do. >> diverse in terms of auto, trucks, hydraulic, electrical. >> a clunker. >> differs slightly from the clunkers. senator coburn knocked me out o this thing, but i'm still hanging in there. you like eaton.

>> jim lacamp, when is my  pullback coming? the s&p 500, i'm happy to have  pullback corrections, when's it coming. >> september is usually our worst month, the market is  stretched and starting to see the market churn a little bit a these levels. we could see a well needed  pullback and would set the stag for possibly a fourth quarter rally a rally investors need to be very careful with and stick  with the leaders. as well as our market has done since the march location brazil, china, india, they have done significantly better. >> that's good. it means the market is growing and they start from a lower base. what triggers the pullback? what's the pullback trigger  risk, jim lacamp? >> i think there is a realization we may have hit  point a where the economy is starting to trough but point b is a long way away, consumer incomes down, consumer spending

very sluggish, this recovery is very slow in the making. >> consumer incomes were terrible in today's spending and income report. we got to see better hours worked and jobs. real fast, jack gage? we having a recovery? not just a market but is there going to be a recovery the second half of this year. >> i believe there will be a recovery the second half of this year. however some of the policies they're talking about now, if put in place, that will be very damaging, real consequences on the front for middle class workers. >> the second half of the year and best to come in 2010. >> very bullish. thank you, gentlemen. coming up. much more on "the kudlow report." cash for clunker, catch me tomorrow morning on "the call" with melissa and trish at 11:00.

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the bull market and help the recovery, however not everyone azblees i think americans always loved to get a little something for nothing and cash for clunkers is helping them feel better. >> absolutely. >> "cnbc reports" right now. >> tonight, on "cnbc reports," where's the pullback? even the pullback these days is a push-up. the dow lifts 30 points and s&p holding on. the bull run runs on. another sign of tax americana's giant resurgence. the great american auto industry's drive for profitability. there may be stormy days ahead, literally. a strong typhoon is heading for hong kong and there are concerns it will shut down asian trading. also tonight, this guy, vladimir putin, why he may be standing between you and more profits for your portfolio. you want the real deal with

dennis kneale? no problem, you got it. "cnbc reports" starts right this sec good evening, i'm dennis kneale. it is 2001 and it is a special pay day. the s&p 500 and the nasdaq indexes stayed above the 1,000 and 2,000 milestones they achieved yesterday and the dow is above a new psychological floor, 9300 for the first time this year. that was the biggest surprise for me and it was fueled by an incredibly upbeat housing number. let's break it down in the real deal with dennis kneale. frankly, i got tell you, i expected a sell-off today, guys. it still may come this week but today, all three rose a teenscy bit more on pend iing home