best thing i can say about this week is that it is over. interest rates are ruling right now. so we have to keep an eye on them. one day we won't, but don't worry, it will get worked i'm jim cramer and i will see you monday! >> the two-day fed meeting is clearly the most important of the markets this week. the fed likely to signal tapering move. that's the headline. >> maybe i'm excited about the fed after all. >> the stocks are on fire. >> no taper in the statement today. >> we would continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year. >> breaking news. the dow just down, touched down 300 points and we're down to 14.883, nearly a 2% drop. >> currently down by 280 points right now and this is the low of the day and the market is misinterpreting tapering for

tightening. >> the fed-induced sell-off continuing and a big way as we approach this final stretch. >> you see the dow down 2.3%. the nasdaq is down 2-plus percent and the s&p down more than that. the markets believe this is the appropriate time to step out and troy to price what a world without fed management would look like and it's not going to be pretty. so what we have, bill, is a contest between the market's fears over the end of tapering and the fed's cash. >> i believe the fed head ben bernanke launched a major de facto tightening during the news conference yesterday and you may not know what the timing is. and what they'll even look like. >> good evening, everyone. i'm larry kudlow. welcome to the end of a wild week on wall street in washington and all over the world and even as the weekend begin, the question remains, what will happen to the markets now that the fed has decided to taper and tighten. what about the rest of the markets like gold, oil and bond

rates? this is suddenly a new world for all of them. plus, as rough as it is here, we're still looking better than the rest of the world. europe is back in financial turmoil especially greece and just look at the violent riots and the financial situation it's caused in brazil. all of those stories and more coming up on "the kudlow report" beginning right now. >> first up. let's go over to cnbc's seema m mody. in case you missed it, wall street just had one of its worst weeks of 2013. investors worried about the prospects of higher interest rates after it said it would scale back on stimulus efforts. up nearly 4% against the japanese yen and a stronger dollar, think, influences the

price of commodities. at one point gold was trading at its lowest level in nearly five years. fears of higher interest rates sent bank stocks lower. goldman sachs, j.p. morgan, morgan stanley all moveing to the downside and here is what caught the attention of traders. the ten-year treasury which influences mortgages and other rates rose above the psychologically key 2.5%. that's the first time since august 2011. there was a slit comeback in the market today, but the nasdaq was weighed down by oracle's disappointing earnings and larry, there are some who say we'll continue to see volatility in the coming weeks. >> maybe in the coming months. that's the story. seema mody, thank you very much, i appreciate it. >> now folks, here's my take. last week i criticized fed head ben bernanke for launching a major de facto tightening policy with a timetable of one year or even less to end bond purchases. i was delighted today to be

joined by st. louis fed head james bullard who actually made the same point. the economy is soft, inflation virtually non-existent and i'm just going to add why risk deflation when we barely have a recovery at all? one major consequence of the bernanke policy of ending bond purchases is the big jump in interest rates and that, in turn, changes stock market valuations and that is one big reason for the large correction in stocks this week. no one can foretell the future. least of all, me. but let me just ask a couple of questions here. have treasury rates completely discounted an end to qe, okay? i don't think they have. here's my fear. i'm just going to say this. if you play this out, the ten-year treasury ought to be the same as the growth of total spending or nominal gdp in the economy and that's 3.5%, maybe

4%. we're at 2.5% on the treasury. in other words, in the last year we'll be looking at rates going to 4% in treasurys and i don't think that's in the market yet. now, also, will both stocks and bonds play cat and mouse with the fed? every day, every week, every month for the next couple of months. that's going to be a tough one. since i don't know the answers, i've got a strong suspicion. we are talking for a lot of volatility. the markets are more likely to move sideways on balance than up. the s&p is up nearly 12% year to date. that's good. i would be thrilled if we can hold that for the rest of the yore. this is going to be a very tricky period. make no mistake about it. remember this. it's still a 2% economy with 1% inflation, but the difference is now interest rates have moved a lot higher and they could move a lot higher from here. this will be very tough for stocks and it could be very tough for the whole economy.

we'll see. i'm not going go big bear right now. i need more information. i want to see how the fed's going play this, but i will say this this evening. i am going neutral for my very bullish stance that i've had for many, many, many months. last point, if we had some pro-growth policies coming out of washington, d.c., while the fed is withdrawing its stimulus, i'd feel a lot better especially pro-growth tax reform to create new incentives and perhaps the best point i can finish on, positive, king dollar. take a look at the charts. kick dollar's holding. it's up about 3% year to date anda that may have helped gold plunge. those could really be positive mustard seeds for future stocks and the economy. remember my mustard seeds? i'm looking for mustard seeds to get us out of what i think is going to be a very difficult situation. all right, let's talk. here now from chicago.

cnbc contributor, jim murrio, director of tjm institutional services and andy bush, author and publisher of the book update from new york, seema global president and assistant treasury secretary and cnbc's chief international correspondent, michelle caruso-cabrera. hello to everybody. andy bush, i wanted to get with you. i don't think it's a very subtle point. i think the fed has influenced interest rates a lot. i think if the fed quits qe and rates will continue to rise. i don't have a crystal ball any better than anybody else, but i have a hard time believing this whole process has been discounted either by bonds or stocks, and i will say it once again, if in the next year the fed does what bernanke said it's going to do and it ends qe -- it ends bond buying, andy bush, then i think the ten-year rate goes from 3.5% to 4%, what's your take? >> i think that's a good level of a normalized interest rate

structure for the united states, assuming we can get growth at 3.5%, they created this situation when they came up with qe part 3 and said it would occur to infinite and i think that's where the markets got in there. so what i'm worried about now is the overleveraging that has occurred over the last year and the pulling out from there. we saw that in emerging markets and we saw it in emerging market bonds and you saw brazil at the top of the show and that's just one xafrmel where i think they went too far out on the risk curve which was encouraged by the federal reserve and now we're pulling back. we just don't know how far and how fast this is going to continue. >> michelle, i'll give you a shot at it. how far and how fast. this is a very tricky and dicey situation and it includes a lot of other things including international stuff. >> absolutely. the emerging markets have underperformed dramatically compared to the s&p 500. the emerging markets are down

15% year to date. i don't know how far it goes, larry, but there's a really basic thing that a lot of people have to remember. whenever the u.s. interest rates rise, everybody else's interest rates all over the world rise as well because we are still the best credit risk in the entire world, right? so the u.s. used to have to pay 1.5% and now it has to pay 2.5% and that means every other country in the world, and so on and when every country's interest rates are rising by default, and out of those economies and in fact, all of the stock markets. >> that's why all of those emerging markets and brazil's got rioting in the street, but whatever. interestingly, japan has the best numbers this whole week. they were up 4.3% and that's a pretty good performance. everywhere else, europe down 4.3% and latin america down 7.5% and that's a typical emerging market story and the emerging

market is down 5% and i have to go to jim muriel, but i think there are so many unknowns as the fed changes its policy, jim, that it just makes me leary. i want to be an optimist, but right now i've got to pull back. what's your take? >> transition is going to be tough no matter when it's going to happen and we have these growing pains going from situation a to situation b and here are the two forces pushing against each other. there are banks all over the world who are bold up on u.s. rates and when they start to move they find themselves on hedge and that will exacerbate the problem, but at the end of the day, and rates start to rise too quickly. the chairman still has one important tool and that's jawboning rates. he certainly will begin saying, you know, that is definitely possible, not only that we don't taper that we don't step up purchases. >> he said that, but i don't know if he has credibility. >> i don't know if he has the

credibility and here's why i hear and it will be the economist steve stanley. the federal reservic termly has made a decision to get out of the bond buying game and they are worried that asset prices are getting too speculative. maybe the events -- i am told that the fed is lowering the bar about economic growth and that is to say that they will accept less growth and lower jobs than they might have a month ago because they do want to get out of the bond purchasing game, david malpass and i don't know if bernanke has any way now of any credibility that any market will listen to him. >> hi, larry. >> i think he has huge credibility and i want to take the other side of this debate and i think it's good that the fed is talking about tapering and the bond buying is harmful to the economy. as we get around the turbulence that came this week, we can get to a better growth environment for the u.s. they're moving in the direction that everyone should want us to go toward which is lower

commodity prices, a stronger dollar. higher bond yields and that's good for savers. we've been complaining about the low bond yields for a long time and so it's good that they're going higher and it's consistent with stronger growth. i like your optimism, but the trouble i have with it. look, i'd like to be as optimistic as you. first of all, the transition will be very difficult. second of all, i don't see evidence of the stronger growth. dwroent see it yet. i think it's very patchy and third of all, i love the dollar story, david. you know i do. i'm a king dollar guy. dollar's stable. it's up a little bit, but can we really rely on it? you have two things going here. on the one side you are saying bernanke has credibility and if he decides to stop buying bonds, if he decides to go back in and jawbone interest rates after that, the dollar might go down. you can't have it both ways. the policy is he's going to end the bond buying and let interest rate normalize and then the dollar goes up and after the

interruption, probably some good things happen, but i don't know which to believe. will the real ben bernanke stand up, please. i have no idea what he's trying to say. >> the key thing that we have to understand is what with the fed's been doing has been harmful. that's yet economy's been doing poorly. we want to get out of that. so if bernanke creates that approximately see, there has to be annel fwant -- he can cause a dramatic stress on markets and that's the last thing he wants. >> markets are pretty resilient. they'll go through some turmoil and then they'll get out of it. >> we're going to come bark and we'll have much more discussion. i want to bring china into this discussion just to make it more difficult on what that's doing to commodities and the rest of the world. so we'll focus on gold also, and other metals that are getting killed. we're just getting started and trying to break down this past

wild week. forecasting the weeks and months ahead. yeah, yeah, don't forget, free market capitalism is the best path to prosperity. i want a strong and steady dollar, and i'm stuck with it and now the question is how to get out and by the way, let's have tax reform in washington, d.c., that will help everybody. i'm kudlow. we'll be right back. [ male announcer ] with free package pickup

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welcome back to the kudlow report. i'm seema mody. the u.s. government filed charges against edward snowden, the nsa leaker. he's charged with espionage, theft and conversion of government property. he's in hong kong ask the u.s. is asking hong kong authorities to detain him. the next step would be to indict snowden and extradite him from hong kong. an apple's board has decided to shift executive stock awards to pay to more of a pay for performance model. apple executives no longer get their grants or restricted stock units based solely on whether they stayed in their jobs. now they'll get a full-sized stock grant only if apple total shareholder return is in the top third of s&p 500 companies.

ceo tim cook has volunteered to put 80% of his future compensation at risk under this new program. larry? >> thanks again, seema mody, we appreciate it. >> let's move on with our guests, gold stabilized from a huge loss yesterday, but it's down almost 7% on the week and it's down about 600 bucks from its peak. what's this mean? can the there are stay strong and rescue david malpass' optimistic forecast? that's really where we're going go. i want that. i want a strong there are. i just don't know what's going to happen. we have jim muriel and andy bush and michelle caruso-cabrera. michelle, i'll go to you on the international side. part of the story the last couple of days has been china. the interbank r.p. loan rate and at one point skyrocketed into the 20% zone. the reports today is that there was some relief and the bank of japan, and china said relax and

let's lone to each other and maybe killing gold and may be killing their own economy and you have to tell me what it means out in china. the central bank has made clear they are tightening. they ease things a little bit today, but they made it clear they are willing to let the interest rates there remain elevated between banks and they're doing this on purpose, larry, because there's a lot of sneaky, snarky, sharky lending going on in china and they don't like it and they think it's too bubbly there. they know the tough times are coming so they want to tighten ahead of that and shake a lot of that out. that is going to have an impact. a lot of small and medium sized businesses even though there's sharky and snarky lending going on. that's how businesses end up getting money in china. the lending is very politicized. i think what is unclear is what are the unintended consequences tightening at the same time that the u.s. is de facto tightening. >> exactly right. that's exactly right. >> i want you to comment on that

because, first of all, the freezing up of the inner bank market. the repo market is what launched the whole 2008 crash and that was the major launching pad as you well know. second, to michelle's point, if the bank of china the people's bank in china is tightening while the federal reserve is tightening, either de facto or -- or facto, i'll say. what's that going to do to the commodity world? metals have been weak, gold is getting crushed, jim muriel. what the heck happens? >> okay. the issue in crude. the pounding that crude took more correspondent with the fed than it did with china. china is definitely a factor and it seems to be more of a dollar issue and more of a rush to risk. in some ways crude has been hit too hard because unlike copper they're not quite as closely associated with gold in china. gold is a different issue. gold is $600 off its high and there's been a massive sentiment

change and yesterday when stocks really started to lose ground and it started to accelerate, was there a small flight to quality buying in bonds that lasted 15 minutes. gold saw no such buying and gold today -- gold is seven or eight bucks and to me that's nothing considering the tanking it took yesterday. crude, though, to me seems like it could rally, too. there's no reason for me to buy gold. >> andy bush, what is your interpretation? i like to see gold falling. i'm not sure i like to see it falling fast. it's a long way down and maybe it's gone to a thousand bucks. i have no idea, but if you have a combination of a stable king dollar or even a stronger king dollar and falling gold prices, what would that tell you? >> well, certainly commodities are getting hit. that's a big negative for commodities. that combination, when rates move higher, that gives people who have been buying gold, a place to put their money and

maybe they'll feel more comfortable and we know there's a fairly large bubble in gold and we know that investors like paulson, they had to dump between 1500 and 1300 and i'm not sure we got in the position and the money issy floing out of there and if that flows into equities and that would be great and i think that will go into some kind of interest-bearing account for a temporary hold. getting back to china just very quickly, it's really clear that chinese authorities want to squeeze out that shadow banking type activity as well as any inflation and that's really key for them. they want to keep this tightening mode for at least another quarter and not be a lynchpin for drawing commodities in the future. >> we could be talking about deflationary policies and deflationary policies in two of the world's biggest economies. deflationary policy which -- i

want to talk in the next segment and interest rates which are real to me and real rates going up and break even inflation expectations going down. i just want to know that there's deflation in this story and maybe that's what jim board of the st. louis fed was trying to get across and everybody hang out and we'll get to everybody else in just a minute and now we've got to talk about the rest of the world and the financial turmoil and everywhere else, brazil, still in the midst of these violent riots and europe in trouble, too. we'll issue back with all of that and this is the kudlow report. please stay with us. the flight.

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>> welcome back to "the kudlow report." i'm seema mody, more protests in brazil as the people continue to take to the streets to show their anger with the government they say is spending too much money on the world cup and the olympics and not enough on the people. protests have spread to more than 100 cities in brazil and reportedly included more than 1 million people. brazil's stock market, the bovespa, take a look at this chart losing nearly 1,000 points today, down more than 20% so far this year. and larry, you talked about the credit crunch developing in china and the central bank there not willing to pump in cash, and we all know about the economic problems in europe and so that's leading a lot of people to conclude that the u.s. with all its problems is still the best place to invest right now. >> all right. maybe, thanks to seema mody. appreciate it very much. back with my panel, jim muriel, andy bush, dave malpass and michelle caruso-cabrera.

>> dave malpass, brazil is developing their own problem, but the china thing is very important and it's damaging all of these commodity countries and russia, canada, australia, dave malpass, if china tightens and the usa tightens at the same time they've got a big problem. we've for 12 years been in a weak dollar policy that pumped up commodities and it was bad for median incomes in the u.s. and we have to get out of that policy so i'm not -- you're putting me in the optimistic camp. i've been bearish on gold, bearish on bonds and all i'm saying is we're getting out of a hole that we dug and it's pretty positive to start the process of getting back to a more market-based infrastructure. so china is not really doing bad. for twbt years, people have tried to say china was going to

have a hard landing and i think they're doing a good move to get more toward market-based interest rates in china as well as we are here. it shouldn't be a negative and i think it's easy to say change is bad, but do they really want a world where oil is $100 a barrel? >> i agree. we're not that far apart because i'm glad the fed is finally getting out of the game. the problem is the timing is this and i'm a little worried about the softness of the economy and the deflationary potential. >> me, too. tax reform will help and if we can get a pro-growth cushion out of washington and i would be excited about this. >> jim muriel, what about all of the commodities and we have china in play and we have brazil in play and we have the fed in play and you talked about oil a moment ago. what about the metals. what about all industrial commodities and guys are telling me, i'm listening to people

saying buy industrial stocks. i've heard people say buy materials. i think they're nuts. i think they're absolutely nuts given what's going on around the world. >> i think they're nut, too. i think the industrial materials particularly like copper are closely tied to china and get the one-two punch of the strengthening dollar here and i think there may come a time when with everything lines up against these and when you jump in and try to pick a bottom. from a small amount, of course, but yeah, i think that they're crazy, too. they can't withstand that, and i would not be long in any of the commodities right now. >> andy bush, tell me about the american economy. the way i see it. 1% inflation and 2% growth is pretty soft and i don't know if profits are going to hold up or not. what's your assessment of our economy? >> yeah. what's interesting, larry, is we know that the fiscal drag is hitting right now. the combination of tax increases and spending cuts should be the most onerous right now in the

second and third quarter and yet, the u.s. economy has held in there fairly well and i'm not so optimistic that we'll get through the two quarters without a drop some place and i'm concerned about not only china's pmi, but i think we'll get softening economic data here that will take some of the taper off of the tapering that we're getting from the fed. in other words, yields should back down here after they race up a bit more. i think 275 on the ten-year might be the peak there and the midpoint in the summer we'll question the u.s. economy a little bit more because of the fiscal drag and just one more thing. two weeks ago, i got a meeting with orrin hatch, and he's obviously the ranking minority member of the central tax writing authority in the congress on the senate side, we know that tax reform is moving forward on the house side and max bachus on the senate. it's just a question of whether or not they get any momentum from actually a slowing economy to get them really moving hard.

>> i would love to see it. >> and this is the low-hanging fruit of the u.s. economy. >> i would love to see it and unfortunately, i don't believe a word of it. i think dave camp wants tax reform. i think max bachus wants tax reform and every member of this member wants tax reform and michelle caruso-cabrera wrote a book about tax reform, and i just don't believe it. >> michelle, this is a weird thing. if our economy is softening and that's another reason bernanke shouldn't have laid out a scale. >> if our economy's softening, do you think the fed will back off and are we going to go back to that game again and he left the door open for that and it will be data dependent and if things don't go well he has the option of stepping back in and i think what people want to -- and even the game has changed. first the goalpost was a time period and then it was a certain

metric and then the metric changed and it was fluid and kind of unclear. >> so i think that's part of what we saw in the last couple of days and people didn't know what they were listening for and what to expect. >> that is a great point and it's the uncertainty that bernanke and the fomc has created and we knew they would have a trouble communicating and pulling out of qe because they have some are experience explaining it not only that, but they have zero experience expanding it and contracting it so they knew this was coming. to put a final point on michelle, too. they left it wide open and i paraphrased a little bit and i heard him say if anyone draws the conclusion, and then they weren't listening to me and there were many big ifs in there, and i think he can completely step back on it and not seem dupe liss us to in the least. >> let's get the flipside in which is the bond buying actively harms the economy. it redirects capital to the government. so i hope they'll stop.

the earlier they taper, the better the economy will do. >> that's the thing. nobody knows. that's is what's so bad about this whole story. nobody knows. the fed ought to have a simple policy and they either ought to target inflation or target the exchange value of the dollar or target nominal gdp or something. this cat and mouse game, if this, then that, if this, then that would drive investors crazy. >> they can't give us clarity. >> it's driving me crazy. >> they should stop buying bonds. it's harmful and they should get out of the 0% interest rate. >> our very own michelle caruso-cabrera, thank you ever so much. we're bringing in a fresh, new team for the second half of the hour to break down everything you need to know after this crazy week. we'll also have the latest news on the big with immigration bill in washington, d.c., stay with us. i'm confused. i'm telling you, i'm confused. all business purchases.

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>> all right. the st. louis fed's james bullard, he's the president, he pushed back today on ben bernanke saying bernanke's tapering comments were inappropriately timed. i agree with bullard. are stocks still worried about the tapering timeline?

of course, they are. so, by the way, are interest rates. let's bring in cnbc contributor, jeff kilberg, founder of kkm financial. andy bush, and the american enterprise. we have a pretty spirited argument, dave malpass wants them to taper out and get out of the bond market. what should they do? what should they do? >> that's hilarious. on one say, all of this bond buying isn't doing anything. they start talking about taper. the market collapses and i think bond buying has been exactly the right thing. i would have preferred to see the fed a much clearer communication strategy with much clearer goals and there was a ton of uncertainty regenerated by that bernanke press conference, i want the fed to keep buying those bonds and i want a clear communication strategy until we see much better growth and much better

job gains and it's way too soon. >> way too soon. that was my initial argument last eaching and jeff, welcome to the show. what is your assessment of the stock market jeff right now? we talked a lot of macro stuff. what's going on inside the stock market? give us some advice of how to play this? >> it's really fragile, larry. we saw this inconsistent fed statement come out and really alarm people in the stock market. we saw that 1576, larry. that was the s&p level which we saw multi-year highs at. we took those out and now we're seeing support, but right now people are continuing to look at the treasury markets with the leadership. with the ten-year above 2.4%, that they do close below the 1576 which they were under for a while. then you see people reposition and rebalance their portfolios. >> i mentioned at the outset of the show that if the fed, in fact, got out of the bond buying

business and let rates normalize, given the state of the economy, and really, i think that ten-year bonds would move up to 3.5% to 4% if there were no federal reserve influence on that. what would that do? what would 3.5% to 4% mean for the market or would it do damage to the valuation. we saw such velocity injectid and think you accidentally injected it because it was a very inconsistent statement and we're calling it the bernanke belly flop. the way he came in and he splashed. they asked him about that and it was interesting. michelle talked about this earlier in the show, but the fact they still had the ability to reduce or add purchases. that spooked stock investors because at the end of the day, larry, now is he going to be day trading the economy contingent

upon data? sweet jesus! >> that's where his credibility is soft, andy bush. i just have to say that. he's just a washington guy, and he's saying all of this stuff. sort of like coming out of both sides of his -- >> i gave him credit. i've done mea culpas on bernanke because the inflation never came that i thought was going come and i praised him. i'm serious. >> we know rates need to correct upwards in a normalized situation and it's the speed and if you get a hundred basis points since the beginning of may. that's pretty fast. if you keep it going you'll get to 3.5% by fall and that's dangerous because the markets can't adjust that fast and it creates a lot of uncertainty and fast deleveraging. that's where bernanke is making his mistake. they needed to come out with some kind of structure to say,

look. if the economy performs this way we'll go a, b and c and do a very slow tapering to make sure there's no disruptions here. clearly, the fed is not all on the same page. >> during that -- during that conference, what will you say when they talk about substantial improvements and they say it's all in the eyes of the beholder. that is the worst thing you could say. what does that mean it's in the eyes of the beholder and we have a completely subjective standards and the messaging is killing him. >> you have to come back. i don't want to be disrespectful to bernanke. i did not. moving goalposts as you put it is exactly right. what is it that the fed wants to see? when do they want to see it and how do they want to extricate themselves from the excessive involvement in the bond markets and in the stock markets and all of those questions are interesting unasked except for people like yourself and they're certainly going unanswered by mr. bernanke and we'll get back

to your money and all of that in just a moment. we still had major political news on the immigration bill and that's coming out of washington and the farm bill, wow! they stopped a trillion dollar farm bowl and how cool is that. we'll get to all of that with an expert commentator in just a moment. you hurt my feelings, todd. i did? when visa signature asked everybody what upgraded experiences really mattered... you suggested luxury car service instead of "strength training with patrick willis."

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the senate will vote on the gang of eight's immigration bill, but there's been republican infighting over tightening the borders to say the least. here thou to discuss that and a couple of other political topics is no el nipure, and this is th bob corker hoeven bill. construct 700 miles of southern border fencing. they'll have $3 billion in new technology for border security and they'll hire 20,000 more border patrol agents. i would think that would be enough, but the gop doesn't. >> you know, they've basically put it as he has said on steroids and if this can't get them to move on it, nothing

will. what's the argument if they're not going to move? they want border security? they've got border security on steroids. >> the cbo this week issued a report saying the immigration bill being discussed in the senate would be pro-growth, probably add 3% to the gdp over time and would save hundreds of billions of dollars on the budget deficit. so if i have border security and pro growth immigration reform when will the republicans ever come around to this? that's the big question? >> well, there are two things to look at this, larry, and it's more important that they pass this thing, and here's the problem. we have a problem. the gop does with reaching out to hispanics. we have an image problem with the hispanic community. so if we are going to be putting our hands up and saying this is still not good enough, we need to get our act together because what's going to happen is we'll

look like the party of no, no, no forever. we need to pass this. we need to get onboard. >> i agree. i'm an immigration reformer. >> absolutely. >> my own magazine, national review is not. very difficult. second subject. some republican leaders in the house took a hit this week. more than a quarter of the gop joined with democrats to defeat the farm bill, but i love thissy did feet. it can save taxpayers a cool billion dollars. let's look at this for a second. $7 billion of food stamp money, like we need to raise food stamps and $200 billion of farm and agrobusiness subsidy. that's the republican side and the food stamps are the democratic side. will this bill stay beaten? is it possible? >> why were they going to bring it up if it wasn't going to pass in the first place. if they wanted anything done they need two bills. they need a farm subsidy bill and then they need a food bill,

two separate entity and on the food stamp it needs to go back to the states. >> do you think it's possible that this bill will die? the bill die? because that's a trillion dollars of savings. it's a big number. >> i think it might. i think if it does come back, i think like i said earlier and it needs to come back in separate forms. did you see, the amendments of some of them. did you see somebody heads an amendment saying that food stamps could be used for personal hygiene stuff. >> did he get hurt? is that important here? >> yeah. he did get hurt. why he came forth do do something that was never going to make it out anyway? >> why? >> i don't know. a lot of republicans are questioning why did you do this? >> he had the committee chairman. >> out in front. ryan was against this bill, and these are senior committee chairmen. >> absolutely.

does it hurt boehner when we go on to other items? >> absolutely it does. he was out front and center with it, you know? absolutely. 100%. weird politics, last point. we had governor rick perry on the program wednesday. he's going around the country, poaching businesses that states that are high-tax and high regulation, but let me ask you a very sifrmel question. is governor question running for president? >> larry -- >> what a dumb question. let me break it down. you don't go on shows like yours and other networks unless you are planning to do something pretty large a national scale and let me tell you something, it will be a $2 billion race in 2016 and hillary clinton is probably going to run which means you have to get your war chest early. $2 billion is a lot of cash. >> does perry have what it takes, okay? he didn't do well the first time around.

he had bad back operations and a lot of reasons he didn't do well. he himself said to me at lunch on wednesday that there are a lot of examples including richard nixon where you run the first time and lose, but you come back and win. can he be credible? >> he's not a bad guy. he's got good policies and if he uses texas to promote himself, but he has a lot of catching up to do because basically, a lot of people thought from his gaffes he was nothing, but a buffoon. he'll have to recover from that. he'll have to repair his image within the republican party and then see where he gets from there. >> has he talked to you for advice? it sounds like he needs you. >> he's not. i've met him behind the scenes on a show in a green guy. great guy. very personable. i think he'll be an excellent fund-raiser which will be important in 2016. >> 2 billion. it takes a lot to race. so the first guy if he does say he'll run in the next couple of months. let me tell youing some, he'll

have to get onboard and start raising that cash fast. >> he's going around the country. very interesting. noelle nikpour. thank you very much. we'll go around the horn with our expert financial panel and get their predictions on what will come up next week for the markets. who the heck knows? i'm kudlow. we'll be right back. have a good night. here you go. you, too. i'm going to dream about that steak. i'm going to dream about that tiramisu. what a night, huh?

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>> a wild, volatile week for the markets and that's over and the

question is what's out there next week? we're back with andy bush, and jeff kilberg. if you don't like bonds because you're afraid the fed's not going to buy them anymore and the rates are going to go higher. you don't want cash because there's a zero interest rate. you don't want emerging markets because they're really submerging markets, best i could tell, do you want to buy stocks? is that possible? >> i think it's premature, larry. we're seeing that strong dollar affect these markets and this week when with correlation went to one, they sold bonds and sold commodities. so right now we think that the ten-year will continue to rise, by the end of the day, larry, the fed's balance sheet north of $3 billion, until the fed trains those excess reserves and we'll see more room to the upside and stocks will break down and they'll be grabbing volatility specifically in the vix. >> andy bush, do you regard this as a bear market in stocks? in other words, is this whole

bernanke business of ending qe, sort of. we're not sure, i guess. does this change the entire market story? does this change the entire bull market story? >> no. i think you had a great point earlier that this is now in a period of arranged environment and we know we'll stabilize some lace because people still want to gain access on performance to the upside for growth. next week it will be interesting to see where the price pressure for the fed is and on the yields and the bonds and my guess is around 275 on the ten-year. we'll get five speakers out next week, and my guess is they'll walk back all of this tapering talk to temper things down a little bit. >> and lose more credibility. >> jim, what is going to happen here? bernanke is going to retire and everybody says janet yellin will replace, but i don't know what the fed's message is and how in the world did bernanke say the

other day that the economy is getting better? i mean, where is this coming from? >> it's really interesting you brought up yellin, because over all of this you will have a brand new fed chairman at some point and one reason why it seemed like the fed man moved early is bernanke wants to be there to shepherd this tapering process and i'm not leaving it to whoever the next fed chairman is, and the economy's improving? >> not too much. >> that's the point that i don't see. you're saying bernanke wants to shepherd it. it sounds like with tapering and with an end to bond purchasing, he wants to lock that policy in. >> that's right. >> before he goes. >> that's it. >> so janet yellin who i guess is more dovish will not change it. can that work? >> a very sharp person with good contacts on the fed suggests that exact scenario and would lead you to believe that it would be a september tapering than a december. >> yeah. then they come back in december

and it may all be over by may for all i know. >> i would say one of the scariest things is to think about janet yellin as the head of the fed and having to pull back on quantitative easing. >> you all are great. that's it for this evening's show. it's a tricky moment, folks. keep your powder dry and that's all i'll say. maybe holding cash is not the worst thing in the world. all business purchases. so you can capture your receipts, and manage them online with jot, the latest app from ink. so you can spend less time doing paperwork. and more time doing paperwork. ink from chase. so you can.

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