patience is a virtue. i'm jim cramer, see you tomorrow. another wild day on wall street. the dow falls as far as 248 points then almost comes back to the break-even point before closing 140 points down. this market still rocked by the fed's de facto tigening. the rise in interest rates and now new negativity on second-quarter profits. we'll get through all that in just a moment. but there's something else in play. something like china, for instance. beijing tightening credit, pulling back hard on lending. so is this policy leading china into a recession? now we have the u.s. and china both in a tightening mode. it can't be good. and here's another potential blow to stocks, the economy and jobs. president obama is going to

announce tomorrow a brutal attack on the coal industry. but i beg to differ. climate change is not manmade. there's no proof of it and the president is once again going down the wrong road. all these stories and more coming up on "the kudlow report" beginning right now. we begin our special coverage with another wild day on the markets. we have cnbc's own josh lipton at the new york stock exchange. good evening. >> reporter: good evening. we had a volatile day. finished off the lows of the session in the red. the dow finished down 139. still major benchmark indexes finishing near two-month lows on heavy volume. concerns about fed tapering. chinese liquidity issues,

worries a credit crunch there will contribute to a weakening of a economy. we saw a bounce in today's session as the market stanged a big comeback but yields move higher. you could see it in some bond etfs. we also had a lot of fed speak, including richard fisher, the dallas fed president, reportedly saying the fed would move cautiously saying he doesn't want to go from wild turkey to cold turkey when it comes to stimulus. the defensive tone, growth worries weighing on the cyclical sectors, the economically sensitive sectors, energy, industrials and financials. but back to china, you could see the selling in certain china etfs like the gxe finishing in the red. that down 13% in the past month. also it's china, so we talked about commodities. copper finishing near a three-year low.

and finally the commodity stocks, names like clshgf and others trading all sharply lower. >> all these cyclical growth stocks, people say it's time to buy industrials, time to buy materials the because the dividend stocks are all too high. maybe the dividend stocks were too high. all i know is transports got killed. the semiconductor index got killed. homeowners and retailers got killed. all the cyclical stocks, even banks got killed. this is not a good omen. >> yeah. we came in today with the concerns about fed tapering but also china making headlines. if you're concerned now as some are saying that china policymakers are ready for short-term growth, you're going to be worried about the cyclical sectors. look at copper, a bellwether because of its industrial

application, takes a dive. look a lot of commodity stocks with it. >> josh lipton, thank you ever so much. we appreciate it. here's my quick take. i still disagree with the fed's de facto tightening plan to end q.e. bond purchases. at some point they have going to have to get out, yes, at some point. but right now, i believe ben bernanke's recent announcement has caused a deflationly shudder throughout the market. stocks, bonds, gold have all been sinking. and cyclical stocks traded badly down today. we'll get back to that teem in just a moment. inflationary expectations in the market have fallen. now i'm hearing a lot of negativity about second-quarter profits. that's the mother's milk of stocks. that can't be good. and as we mentioned before, we have china tightening, emerging market problems. i'll summarize with this. we're going to get through all this. we're going to get through all this. i don't want to get too bearish. i just want to note in my humble

opinion the correction is not over yet. so let's talk. we have carol roth, cnbc contributor, radio host and bestselling author of "the entrepreneur equation." and warren myers on set, vice president of floor operations at dme securities. and dave goldman, president of macro strategy. warren, what happened today? up and down, up and down. and the growth stocks, the economic sensitive stocks just got killed. >> they sure did. we came in this morning. pulled down by the news over china, shanghai down 5% overnight. that send shockwaves through and continues that selloff we saw on friday. then we had fed presence speak midday today. that sent a raul throughout the market. we thought we might hit positive territory on the dow.

at the end of the day, we rolled back over. but the cyclicals got killed. >> that bothers me. >> i think people are reading the fed's comments incorrectly. >> i think the fed is reading the markets wrong. seriously just as a point, we're going to all get in here. bernanke says the fed is upbeat about the economy. i wish i saw more of that. i really do. and i'm looking at the reaction of stocks and the last three or four trading days since his news conference, pretty much the same thing. now i notice financials got whacked big-time today. long-term rising rates and a steep curve, even a banker could make money. >> you would think the financials would be doing quite well and that's not the case. i think the fed's growth prospects for the economy are overblown. i see moderate growth at best. all that does is extend the q.e.

or the lack of tapering for the foreseeable future. >> we're going to get to that. we're going to do heavy fed watching in a couple of months. carol roth, i wouldn't say you're in the flyover land. chicago is its own great urban area. but i want to ask you if you have any feel from your radio and whatnot about what middle america, main street america, they're watching this, the stock market's getting slammed and bernanke's talking a lot of things nobody probably understands. what are people saying out there? what kind of calls are you getting? what kind of questions are you getting on your radio show? >> it's a funny thing. the people of middle america, the middle of the heartland of the country, are not particularly concerned about this. the reason is, there's only 24 hours in a day and there's so much more for them to be concerned about. they are concerned about the day-to-day economy that affects their lives. they still don't have jobs or are underemployed.

here in illinois, we have a 9.1 employment rate. we have the worst credit rating in the entire country. things like that, the retirement, what's coming down the pike for obama care, those are the types of concerns for them. on a daily base, what's going on with the market doesn't factor into their decision making. a little bit of a pullback actually would be very good for them because many of them haven't gotten back in the market yet and we need more of them to participate. i'm actually okay with this. >> when they call on stocks -- sometimes when i'm doing radio, i read the call numbers out and i say, go ahead, talk to me about so-and-so, go ahead, beat me up because i'm in favor of immigration reform or tell me how negative you are on the stock market because usually i'm optimistic. so when they do talk about it, what do they say? optimism, pessimism? >> there's a lot of confusion and there's a feeling of a

disconnect between what's going on on wall street and on main street. even with the pullback now, the markets are up huge. 13,104 on the dow the beginning of the year. they're seeing it going up and up and up and not seeing the same thing happening in their own backyards. i think they still think the market is still overvalued today. >> dave goldberg, we have this de facto tightening, bernanke, we have deflationly impulses, higher interest rates -- higher interest rates really hurt multiples if you're looking at capitalized profits. you have to put 100 base point hike in interest rates whether you're treasuries or corporate. we have the china problem. give me some good news out there. is there such a thing? >> the good news is china isn't going into a recession. they're cleaning out dead wood in the crude and rough way that a communist party-led market or non-market is going to do so.

the chinese bank is saying, we're not going to allow banks to recapitalize loans or allow the smaller banks to use off-balance sheet -- >> don't go too deep on china right now. we'll talk about that later. profits, i was on the phone today talking to a bunch of peop people. now the word on profits is they're going to fall in the second quarter and the outlook for the future quarters is going down, too. >> profits already fell on a gdp basis in the first quarter. top line fell in the first quarter. but you had so much equity share buybacks from the denominator fell, so the per-share profits went up despite shrinking top line, shrinking overall profits in the economy. now we're going to see the end of this massive wave of corporate borrowing to finance share buybacks because that's an inflation play. you figure your revenue grows with inflation and you've got fixed payments which are low. but your cost of borrowing just

soared and with inflation at the t lowest level in two generation, doesn't look like a good idea anymore which means both the fundamentals, the top line and the overall profits and the per-share profit factor are working against us. >> warren, if bernanke -- if you ask me, if mr. bern would look at his own words shs which is to say, they want inflation to go a little higher, 2%, 2.5%, they don't want deflation. i don't want deflation. if he saw this stuff and he looked at what's going on and he looked at the stocks that are falling and the break-evens forecasting lower inflation, he would say, no, this is not the time to mess. and if he said, this is not the time to mess around, then i'd say, buy the correction. but he's not saying, this is not the time to mess around. if he followed his own advice, it would be a great time to buy the market. >> what you saw by bernanke's

comments recently and back at the end of may, his comments were what were expected. today in particular and over the last couple of days, the fed presence coming out and doing the dirty work. >> bernanke yelling, dudley, that's all i care about. >> there's been a lot of testing of this marketplace. they've waited for the market reaction. >> there's been a bewildering problem from bernanke because he told us last summer, we need 2.5% inflation. now you have less than 1% inflation. >> and he's given his most militant statement up to date. carol, what have you got? >> we're in a win-win situation here because i think that either the economic numbers come in better than we expect and that will start taking over and people will start focusing more on fundamentals or if not, he's going to have to take back those statements and we're going to go back to the party. we're in a win-win situation

either way. >> would you buy the market back, then? >> i absolutely would. >> are you buying it right now? >> not right now but very close. >> do i dare ask -- i don't know if you do stocks or not, but what sectors? what do you have your eye on? >> if you're a believer that interest rates are going to go up or stay up, you have to be in the insurance, the financials. if you're not a believer and you think it's a temporary pullback, you have to get back into everything that was doing well, technology is certainly a play. i wouldn't touch the homebuilders until rates start to drop back down again. >> would you buy the market? >> no. the first thing they're going to buy is bonds. >> that's interesting. so you're saying what? buy bonds, buy mortgage-backed bonds? >> i'm saying treasuries at 2.5% in the ten-year are a buy. >> hold that thought. carol roth, thank you very much. we appreciate it. warren myers, we appreciate it. now, here's a burning question for all of these markets.

is the fed really tying its policies to the economic numbers or has the fed already made up its mind to get out of q.e. no matter what? we're about to talk to one fed watcher who's going to make that case. and that's up next. don't forget, free market capitalism is the best path to prosperity. sometimes you have to listen to market prices, gold and bonds and stocks are telling the fed to reconsider. i'm kudlow. we'll be right back.

what's really inside ben bernanke's head as stocks continue to go down since he held his news conference last week? look at this chart. dow is down 656 points over the past four days. not the end of the world but it is not healthy. here to tell us, steve stanley, chief economist. dave goldberg still with me on set. steve, i read your article, thought it was really interesting. your basic point is that the fed is determined to get out of quantitative easing, to get out of that business. do i have that right and why? >> that's it. yeah. you look at what changed between the may 1st fomc statement. inflation is going the wrong

way, from their perspective. but what's changed is they finally were convinced that q.e. was causing a lot of financial instability and they decided it's time to get out of this thing. they're going to try to couch it around the economy because they don't want to admit they made a mistake. so they tell the story around the economy. but in reality, they realized they were causing a lot of asset price inflation that wasn't healthy. >> are they going to lower their economic thresholds? a lot of people believe that it's sort of ainwiwin-win. if the economy comes in good, that's good news and we should buy stocks in both cases. but won't the fed accept a slower economy and still get out of q.e.? >> yes. i don't think the fed is sensitive to every little wiggle in the data. they've made a conclusion that

they want to get out of this as gracefully as they can. obviously if things go to hell in a hand basket, they'll have to call in. but if the economy continues on its current path, they're looking to get out of q.e. as soon as they can. >> tell me, steve, did you shrink bernanke? did you do some psychoanalysis or psychotherapy? what's given you this insight into bernanke who would probably deny everything if they were here? why do you feel so strongly that they want to get out of q.e.? >> well, i think they've finally gotting t gotti gotting -- gotten the message. q.e. was causing a lot of asset price inflation that wasn't healthy and there's too much risk going on. i think the fed may have finally gotten that message. perhaps it was the reaction to what the b.o.j. did, which was a

lot of quantitative easing over there and the instability that that caused. but it wasn't just bernanke, really. you certainly had the -- kind of the rumbling from bernanke a month ago at the j.e.c. testimony. but others as well, williams out in san francisco who's i think very dovish as well. and even dudley and rosengren started to take a much more positive tone toward the economy. i think in retrospect, you can piece it together and see that they were looking to spin a happy economic story so that they could get out from the corner they painted. >> my reading of his press conference on wednesday was almost spot-on with yours. i felt i heard a much more hawkish bernanke. i really did. and i gasped. i think the whole market has been gasping ever since. dave, did you hear a more hawkish fed and do you think stanley is going to be right and that the fed wants to get out of the business of buying bonds? >> i think steve's point has a lot of merit. the gong they rang at the top of

the market was the bank for international settlement's report for the quarter. they said, you just can't keep doing this forever. they said yesterday, at some point it just has to stop no matter where you are in the economy, no matter where you are in inflation, it has to come to an end. so a central bank and consensus has been developing that this has to come to an end some time. the fed just might declare victory and go home like it was said about the vietnam war. >> steve stanley, what's the interest rate implication of this? let's look at the ten-year. it's up around 2.55 today, if i'm not mistaken. how high is the ten-year going to go under your scenario? >> traditionally ten-year yields are somewhere in the neighborhood of nominal gdp. that's probably 3.5%, 4%. doesn't mean we get there in the next week or two. but there's more to go if we're

on the path toward normalizat n normalization. i think more importantly, risk is m copping off in the market. people had just assumed the fed was going to be there forever and they were in all sorts of carry trades, whether emerging markets or credit or risky mortgages or whatever it was. you're seeing people take off those sorts of trades. even if treasuries hang in there, you'll see a lot of de-risking in the markets -- >> very volatile, very, very volatile. no easy way out. steve stanley, thank you so much. we appreciate your insights. now, call it the china syndrome if you want. we're going to get a live report from beijing. china's put in new tightening policies. cnbc's michelle caruso-cabrera is going to join us with her take on what's really going on. stay with us. now we go to china. it's monday.

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the usa is in what i'm calling a de facto tightening. but that's nothing compared to china. let's get a live report from beijing. eunice yun is there with us. what's going on out there. >> reporter: feeling a lot of pressure in the money markets and people are very concerned about the credit squeeze. a lot of indication from the authorities that they're going to be imposing discipline in the financial sector. they're getting very tough on the banks.

this is after the china central bank said it believed the liquidity is at reasonable levels and also it said that it was hoping the major banks would come in and help to stabilize the markets. the main takeaway people are getting from this is that china's leaders are getting tough and serious about economic reforms and they're getting tougher on the banks. the big question that people have here is just how far they're going to be willing to let things go before they potentially risk a systemic threat. the reason why people are asking that question is because last week what we also saw is just how fragile the system is. this was not a major policy change that we saw on the part of the pdoc and the banks couldn't handle it. they're so used to having the government come in with a lot of cash that a lot of people are asking if the government actually does at one point want to rein in all the excess we have in this economy.

how are they going to be able to adjust? there are a lot of questions about this particular action, larry. >> one question, when you allow overnight bank-to-bank loans get up to 10%, 15%, 20%, in my humble opinion, you're playing with fire and that was one of the triggers of the 2008 crisis in new york and london. they're playing with fire, eunice. >> reporter: yeah, that's why a lot of people here have been calling the pboc very reckless, saying they were reckless in the way they were handling the situation. even though there's an impression outside that the chinese government is always in control because they direct all the lending, because they can instruct one major bank to lend to another, smaller bank, for example, the fact that there is so much shadow banking and informal lending in this economy is just evidence that they are not in control. and in fact over the weekend, we heard from one editorial, from xinhua news agency, saying that

this credit squeeze was due in part because of the shadow banking and the crackdown on the shadow banking. we know the authorities want to stop all this underground lending. but the fact is there are lots of different ways that people are getting money unofficially. so it could actually stop some unofficial lending from, for example, a company borrowing at very cheap rates and then lending to another company. but then there are so many other ways in which they can't stop this underground lending. >> great stuff. cnbc's eunice yoon, thank you very much. our question is simple, is china's tight money policy leading it into a recession? let's bring in michelle caruso-cabrera, cnbc's chief international correspondent. dave goldberg still here with me on the set. you heard eunice. reckless lending because of this tightening in the interbank market, lose control. i don't like the sound of this. why doesn't anybody consider the possibility that china could be going into a recession? >> i think people do consider

that it's a good possibility that they could be going into recession. i think that's why you saw the markets stumble so much. remember, shanghai fell 5% overnight because of the commentary that came out from the central bank that said, this tough liquidity stance we're taking is here to stay, not as bad as we saw late last week with the nosebleed levels that we saw that looked apocalyptic. but we're going to rein in that type of lending. and if you rein in lending, you're reining it in. that means less credit in the economy. so the economy slows. what are the unintended consequences of what they are doing? >> that's the thing, unintended consequences. they don't necessarily control every single thing out there. they don't anymore. it's a little different thing. i don't know about the numbers, but i think it was goldman sachs today -- they lowered their chinese growth estimate from 7.5% to 7%. i want to know who's going to be

the first to say, 3%, 4%, 5%? >> i don't know who would be the first to say that. but even if they grow at 3%, that is going to feel recessionary. to go from 7% growth to 3% growth can feel traumaticic. two years ago, brazil was growing at record percents. now look what's happening in the streets. it will have an impact if they slow that much. and if they're going to crack down, we're going to try to stop this market, they can do it. >> they can do it but they may not do it with ease, without any problems. again, i say what our correspondent said in china. when you do bank-to-bank lending get to 15%, 20%, 25%, that is a crisis and it was precisely that repo market breakdown that led to the 2008 crash here in the

united states. >> yeah, but it's a very different situation because the chinese let it happen for a couple of days and brought rates down to 6%. they can put rates anywhere they want. >> i thought the story was they did not put money in. they told the banks to loosen up to each other but they themselves, the pboc did not put money in. >> they sent a signal. then they put money in and brought rates down. this has nothing to do with 2008. very different situation. just came back from hong kong. i spoke to a lot of leading industrialists. nobody i know is concerned about a recession or 3% growth. everyone thinks we're going to be around the 7% target. >> that almost clinches it that we're going to have 3% growth. come on! since when have you become a consensus thinker? >> china's a different -- >> you have all those state-owned enterprises. they don't know -- state-run banks don't know what the paper is in those banks. p pboc willing to mess around

with a 20% overnight rate -- >> when we had horrendous overnight rates in the u.s., it was because banks did not trust other banks. they thought they would fail. that's not the case in china. china's not going to let a big bank in china fail. they were hoarding money -- the central bank is not going to give it to us anymore. we've lent out all this money and we don't have enough to cover our daily operations. it wasn't a trust factor, it was a hoarding factor. that's the message the central bank was saying. stop lending out to so much dunk junk and keep some of it indead. >> in the next three years, china is going to get rid of capital controls for the interest rate market. we'll try to have a normal financial system, which it can't have right now as long as they have the shadow banking system -- >> what are they going to do with that? >> they're going to put it back on the balance sheets of the

banks where they can control it and free up the market. they'll probably free the capital market before capital controls -- >> but they're not getting capital inflows the way they did before and not buying u.s. treasuries the way they did before. is this china crisis partly responsible for the jump-up in our treasury rates, because they're not buying, as well as the decline in commodities and stocks? is that how powerful china can be? >> china's decision not to allow monetary policy to try to drive the economy is one more vote in the consensus in the idea that it can promote recovery. but because they've got capital controls, they're seal off from other money markets. so the flows are simply not that important. most important takeaway from china is you have a ten-year term with the new leadership and they want to get all the pain up front. >> they're pro-market. michelle caruso-cabrera, thank you. >> david goldberg, thank you

very much. we just had a big test vote on the immigration bill in the senate. we're going to see whether this immigration plan is right for the economy next up on "the kudlow report." the pursuit of a better tomorrow is something we all share. but who can help you find your own path?

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the senate voted this afternoon to pass an amendment to the immigration reform bill that would beef up border security by $30 billion and add 40,000 new agents. now the question is what's going to happen in the republican house. for more, we go to ace political reporter and cnbc contributor robert costa who is in washington with the details. they didn't get 70 votes. >> no, they got 67 votes. that's a big win for the gang of eight. that means it moves ahead, probably going to get close to 70 votes in the senate. it's going to put pressure on the house. >> what kind of pressure on the house? give us more. >> it's going to give some pressure on the house to seriously consider this. there's much more resistance within the republican congress about this. they're going to see momentum on the republican side. and john boehner i bet is paying attention.

does he let this bill come to the house floor? he has to answer that question in the coming days. >> let me ask you about senator rubio who's taken unbelievable heat from tough conservatives against this. sarah palin blasted him today. ann coulter has been unkind to him. and yet my sense is, senator rubio has been a very brave guy to go through this. >> larry, you love history, i love history. when you look at what makes political leadership in this country, it means taking a risk. rubio came into the senate in january of 2011, tea party hero, by doing the gang of eight, he's taken a political risk. may not help him in the iowa caucuses in 2016. but he's trying to establish himself as a national voice and a national leader. >> thank you, robert. appreciate it very much. you've heard me argue a million times that immigration reform is pro growth. let me add that immigration states all across the country are going to be affected by this.

in colorado, for example, immigrant businesses generate $1.2 billion a year. in delaware, 64% of engineering ph.d.s are foreign born. north dakota, 8.6 job posting for each high-end brainiac worker. isn't that all enough to get this bill passed? you're kind of the nag in this. you don't like this bill. why? >> why? i'm pro immigration. i do believe that immigration promotes growth. but this is a corrupt bill. it is a repeat of obama care. 1,198 pages here that members of the senate are being asked to vote on without reading it. comprehensive is a synonym for unread. and this bill is full of bribes to get reluctant senators to vote for the bill --

>> what kind of bribes? >> page 66, taxpayer-funded advertising for tourist sites such as las vegas casinos to get the republican member of the senate -- >> this is like the health care bill? >> exactly like it. page 1,169, a $1.3 billion jobs bill to mollify bernie sanders. >> you heard betsy. but i don't know, i'm not quite as pure and clean. as far as i know, they put in $1.5 billion jobs bill just to offset whatever they're going to offset. my question is, is this what it takes? >> i think this is what it takes. they are trying to get bipartisan agreement in both houses of conference. that's not easy to do. betsy's not wrong. there is stuff in this bill that shouldn't be here, including frankly, doubling the border guards. we don't need to border the agents on the border. we need better control on the border. but it's probably not a man every 1,000 feet.

the real way to get control is in the workplace. and the real, real way to get control is to give workers a way to get here legally. there's no question there's stuff in this bill that's put in there to get votes. there always is. >> the country's been waiting on this government, though. and the point is that -- >> the country's been waiting for more than 20 years since we last fixed the immigration system. what we have is unacceptable for everybody. microsoft can't get the workers it needs and the dairy farmers can't get the workers they need -- >> you and i both support immigration. the fact is the house republicans would like to do this one step at a time. 20-page bills in plain, honest english the members of congress would read before they vote on it. this bill, for example, contains hundreds of millions of dollars in taxpayer money going to immigrant advocacy groups that are highly partisan and that will tilt the scales as if they're a two-party system. >> a lot of that will get cleaned out by the house.

the house is not going to take up this bill, i guarantee. >> here's the thing. the real news here -- i agree with betsy. i hate corruption, i hate vote buying and all that pork barrel stuff. but now we have a very strong border security component to this -- >> not true. >> maybe it's too strong. and that goes, it seems to me, with the legalization and that will bring the economic growth that we've been talking about for so many years. to me, immigration is good for the united states, not bad for the united states. tomorrow going into the house, legitimately, can people now say that the border security equals the legalization/citizenship process? have they solved that problem? >> i think it's extremely unlikely -- i won't say never or impossible -- but extremely unlikely that the house will take up this bill. the house is going to come up with its own answer that's going to be -- just what betsy said. a piece here for the border, a piece here for the workplace, a

piece here for the high skill workers. they're going to do it piece by piece, not the senate bill, but their own thing. >> and it will result in a better law. >> then the two will go -- it will be better on some things and not as good on others. >> so they go into conference? >> then they go to conference if they get that far. the question is going to be, has the house done enough of the pieces, do they have enough to have any good bargaining power? conference is where the real game is and where the real bill gets written. and that will be sometime in the fall. >> the border security in this bill is an illusion. the 38,000 border agents don't come on until eight years from now. >> why is that? >> you've got me. the 700-mile fence, the secretary has the discretion not to approve it. >> it can't all start at once. you have to give some latitude for that. >> no.

>> the border agent build-up doesn't start till 2017. >> tomorrow, why do they have to wait four years for the agents to start coming on? >> i think they have to be done by then. i don't think it says that they can't start. >> so they can phase it in? >> it's a drop in the bucket. if they were sincere about it, first thing they can do is put the border agents on. >> the point here to me is america's living in a world that's globally integrated. we hire our ph.d.s in india and china and we get our farm workers in mexico, we get our nurses in the philippines. it's good for those countries and it's good for us. we need a system that legalizes that. >> i hope we can solve the problems. they're legitimate issues. nobody likes that kind of corruption. but i think this is very doable. i hope the momentum continues. and, again, i'm going to give senator rubio a lot of credit. the guy's taken unbelievable flak. and he's the guy that really put

it on the table and look how far it's gone. thank you both very much. the irs chief tells reporters that the abuse of the agencies was more widespread than we were all told, more corruption. cnbc's eamon javers has the latest on that next up on "kudlow." (announcer) scottrade knows our clients trade and invest their own way. with scottrade's 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 real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company."

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the new head of the irs says the inappropriate targeting of certain groups was much broader and lasted much longer than we were told. eamon javers has all those details for us. good evening, eamon. >> reporter: good evening, larry. the irs said today that it has finished its review of internal policies after the political targeting scandal and it said that it found that it's been targeting more entities than was previously known. the focus here is on the so-called "be on the lookout" or bolo list to focus on particular conservative groups. the new acting head of the irs said they've been targeting a wider range of groups, the "associated press" reporting some of those targeting terms included terms like israel, also occupy or progressive, indicating perhaps a wider ideological spectrum of groups.

a couple of other details from the irs's report. there's no leadership responsible for tax-exempt applications at the irs. they said the irs is expediting tax-exemption applicants who have waited longer than 120 days so far. they also said there's a new process in place to assess criteria and screening procedures across the irs. also with new information about the terms on that bolo list, we have to watch and see exactly what names come out as a part of that list. dan dan dan dan danny saying they've suspended the list of the bolo list. here comes the latest from team obama and plannette government.

the president is about to announce a new series of executive orders he says will fight climate change. but is it really just a war on coal? get ready for much bigger power bills. we've got the latest on this new plant which is likely to damage the economy. please stay with us on "kudlow." [ male announcer ] when gloria and her financial advisor

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president obama set to unveil drastic new executive actions and regulations tomorrow to curb greenhouse gas

emissions. it really looks like a war on coal. just check out how the coal stocks did today. here's a couple of them. they're all down, 6%, 7%, 8%. one is down 16%. incredible stuff. here now to counter the president's climate change confusion is our friend steve hayward, visiting professor at the university of colorado boulder. first question, steve, is it in fact the war on coal? >> if you ask any environmentalist what item number one through number five on their wish list is, kill coal. the only thing drastic about the speech obama is giving tomorrow is his desperate political need to please environmentalists. the epa two months ago had to withdraw their initial coal regulations because they realized they would not survive legal challenge. it's not clear to me what obama is going to propose that will be new or that won't also be vulnerable to legal challenge. the thing to watch for is

whether he will go further and not only try and attack power plants but whether he'll announce steps to try and block the export of american coal. american coal exports to europe have been going up the last five years. >> there may be climate change. i'm not smart enough to know. there may be climate change. what i want is know is is it manmade, natural climate change or is it caused by the sun -- how do we know it's caused by coal or carbon emissions? >> well, right now what's happening in the state of debate is quite interesting. we've gone about 17 years without any warming. and the flat period is now falling below the lowest estimates of the lowest projections of the models. so there's a crisis right now in climate science. and even the mainstream media is picking this up. i love "economist" magazine's phrase. they said, if climate science were a bond agency, it would be

put on the watch list for a downgrade. >> i do like that very much. so how can the president, knowing this, just sick the epa or go through this whole thing -- who knows what's going to be there? he may have more solyndras in there, more lousy energy department investments in there for renewable energy. meanwhile, we are sitting on the greatest miracle in energy with the oil and natural gas fracking revolution and he wants to single out coal and destroy tens of thousands of jobs. >> yeah, his preview of the speech on saturday had one lewds you line. he said, we need scientists to invent new forms of energy and farmers to grow it, which sounds like he's doubling down on this ethanol boondoggle. and another point in the speech will be to open up 600 million acres of federal land for more energy like renewable and solar. the administration has been hostile to increased oil and gas production on federal land.

production of oil and gas on federal land has been declining under obama. and all of the increase we've seen in the last three or four years has been on private or state land. if the federal government was reasonable at all, we'd be seeing oil production going up even more than it is. >> we ought to open up the federal lands to fracking. last one, steve, do you think he's going to pull a fast one tomorrow, a carbon tax or worse, go back to cap and trade tax? >> i don't think so. i think the carbon tax story is an interesting one. if it's only ruled out a carbon tax but he would let republicans propose a carbon tax in exchange for tax reform, although we're a long way from that point. i think he knows cap and trade is dead. but if you're an environmentalist, you are very disappointed with obama because he did not lift a finger in his first term to help the cap and trade bill or do anything else on climate change he's an utter failure from their point of view. >> yes or no, are we going to get the keystone pipeline

finally? yes or no? >> no, i think he's going to find a way to try and nix it. he shouldn't but he might. >> that's the worst news yet. steve, thank you very much, buddy. coming up tomorrow night, we'll be joined by west virginia democratic senator joe manchin who called carbon regulation, quote, shortsided and wrong. then he really got mad. that's it for this evening. i'm larry kudlow. see you tomorrow night. owning i. the ones getting involved and staying engaged. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives.

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>> tonight on the car chasers... i hit a huge swap meet... this is like uncharted territory. looking for the perfect ride. how much you want? >> i'll take 90,000. >> but a simple paint job... wait a minute. has me seeing red. this was supposed to go all the way to the end. [groans] and when a big buyer heads to lubbock, i need to reel him in... >> oh, yeah, that catches my eye. >> before he skips town empty-handed. >> i don't know, that color... almost looks like a rust red. >> i need some aspirin. my name is jeff allen. i buy, fix, and flip cars. but i don't do it alone. i've got perry... meg...