major takeaway, get tough on your stocks after a rally. i like to say there's always a bull market somewhere, i cramer you next time! now we've got a new tower rising above the new york skyline and al qaeda's on the path to defeat. >> al qaeda's on the path to defeat. >> today the core of al qaeda in afghanistan and pakistan is on the path to defeat. >> we've been able to decimate al qaeda. al qaeda has been des plated. . >> well, despite what president obama has said, al qaeda is not decimated. it's back, if it ever went away and strong enough that the state department is issuing a travel ban and closing all u.s. embassies in the muslim world because of a real and credible terror threat.

now, 162,000 jobs added in july here in the usa. the soft, disappointing number with part-timers beating full-timers confirms what we already know about the economy. it's still only 2%, but stocks liked it. we may be talking about a downsized mini goldilocks. my full take on the jobs report and the market and what it means for the fed later on in the show. and the war of words between chris christie and rand paul is heating up. is the future of the republican party at stake here? our free market friday panel will have all those stories and much more coming up in "the kudlow report" beginning right now. good evening, everyone. welcome back to "ed kudlow report." i'm larry kudlow. the u.s. is on high alert over the threat of an al qaeda terror attack in the northeast or north africa starting this weekend. nbc news' pete williams joins us

now with all of the details. good evening, pete. >> u.s. officials say this in response to an al qaeda threat from yemen. some kind of unspecified plot to attack u.s. diplomatic posts overseas starting this sunday. in response, the state department ordered sunday closings for seven embassies and consulates in 17 foreign countries and there are reports and these are posts that would normally be open on sunday and that's the usual work day in the muslim world and they're mostly in the middle east and north africa. it is unclear at this point whether they would remain closed beyond sunday and the state department has also issued a world wide travel alert for americans who live or are traveling overseas and it urges them to be extra vigilant during the coming month and that's an indication of how long this threat window is for at least four weeks. they say that the plot may target not only u.s. diplomatic post, but other u.s. targets or western interests and officials aren't saying much about what's

behind this threat other than just saying it might be tied to the month-long period of fasting known as ramadan that ends around this time of the year, larry? >> pete, are there any other western countries who are closing down their embassies and consulates? >> the united kingdom is shutting down its embassy in yemen which is where we believe the source o ridge -- this threat originates. it's going to close it for at least a couple of days, but other than that, no, we haven't heard. >> and just last one, i appreciate your time. has anything like this ever happened in so-called peacetime? i mean, this is like a war-time action. has it ever happened before? >> it's very unusual. there were closings around the anniversary of 9/11, but this is -- part of the reason that this is so comprehensive and involves so many places is because there's so little specificity of what the the targets are and what they may be so based on where they think the threat is most likely to be centered in that part of the world, that's where they're narrowing their action. >> all right.

very good. nbc's pete williams, thanks very much for helping us. >> so how imminent is al qaeda's threat to the u.s.? here now we have former white house middle east policy adviser and ambassador mark ginsburg. ambassador ginsburg and mark, welcome back to the show. this sounds like a wartime action and it almost, mark, sounds like americans are not safe in these muslim countries. >> well, the threat clearly issued by al qaeda is being taken very seriously by the section of the state department because it's not just the closing of the embassies that has occurred. they've issued an actual advisory to all u.s. citizens who are traveling in and around these countries which is highly unusual. i mean, we're talking about not only all of the muslim country, but larry, they have also declared that the u.s. embassy in tel aviv israel which is ordinarily closed on sunday is also supposed to be, quote, closed on sunday. so the threat is very real, and

we have to understand, larry, there's an invisible war that's going on against al qaeda and its franchise organizations in libya, in mali and -- >> i'm glad, we get that. i'm glad that the united states government is now fully acknowledging that there is a terror war against al qaeda. i mean, we've been through periods as you well know where there was no war and we decimated everybody and we knocked them all off so maybe this is proof that maybe they're wising up. what i'm asking you is someone on the inside, is this the state department? is this the nsc or is this president obama who made this decision? >> this is not the state department alone. the counterterrorism adviser to the president and the national security adviser to the president and the secretary of state clearly were all probably consulted, not consulted.

they actually probably were in a situation room consultation on this because this is so extensive. so it was not one element of the u.s. government that made this decision. >> all right. let's bring in our friday free market panel to share this discussion with ambassador ginsburg. we have democratic strategist and cnbc contributor keith boynkin and nan hayworth and from talk radio. thank you, everybody. this is like the benghazi prevention effort. that's what it is. i'm glad of it. i think this is the sort of thing we should have done a long time ago, but it kind of has that because the president has been making fun of benghazi and now it looks like we're taking this thing seriously. what is your thought about this? i was at the classified briefing about ben gassy and it is very clear that the american public doesn't know the full story of benghazi, but it's wise indeed that they're taking these

actions now because we are vulnerable and that's a message that the administration didn't want to get out before the election, but we are clearly vulnerable and you want to know what kind of action proxy states like russia and iran and what kind of effect they're having and this is a widespread phenomenon. >> in your remarks, i hate to say this, but it sounds like americans are not safe in the middle east and that's really what it sounds like. i don't like that. i hope that's not true, but when i see this -- by the way, the memo said it could go through august 31st. so who knows how long these embassies will be shut down. we're in a war. this is a war. is that not right? al qaeda is gone, it's defeated but if anthony weiner can make a comeback, i guess anybody can, but this is also an admission that benghazi was mishandled. they had specific threats from other countries and intelligence services. proper precautions weren't taken. you see probably overreaction at

this point upon i saw the list of embassies and it's dozens and dozens of embassies and not to mention the buildings that need to be secured and i don't know how many secret documents that have to be watched. this is very serious. >> do you think president obama would like to take those words back that we decimated al qaeda and he'd like to take those words back now? >> i never heard him say that al qaeda was not a threat. >> he said it in our clip. he said al qaeda, we decimated the top leadership and we killed osama bin laden and the main number two or number three leaders. i don't think anything he said was inaccurate. the reality is al qaeda has been reconstituted in different satellite organizations across the region. so we have al qaeda in libya, for example. al qaeda in the sudan, for example. so it's not just the old al qaeda in afghanistan or iraq. al qaeda is taking different forms and shapes and that's the reality that the state department -- >> repeat my question.

he said we decimated al qaeda, okay? he said they were not the threat that they once were, however you wish to paraphrase it. our clips were pretty specific. have they now, thankfully, changed their position about the al qaeda threat? is that what you hear about this announcement? >> no. this is an administration that's been ever vigilant in fighting the threat since they came in office. they were focused about getting osama bin laden from the beginning and they've been executing drone strikes at a rate faster than the bush administration and by the way, that's upsetting a lot of liberals as he's -- libertarians and liberals. that's true, and i think the reality is that this probably is a bit of an overreaction as mark suggested, but if he didn't do this, you know what people would say? oh, benghazi. benghazi. just like nan and mark are saying right now. >> you're grimacing -- as keith made that defense of the

president you were grimacing, why? >> we lost four fine americans in benghazi in those attacks. these are real lives and real families and i've gone to funerals of officers who have been lost in the war in afghanistan. this is -- we need to have an administration that can successfully protect our nation and the troops and the men and women we have in these very risky places. so i think the lesson of benghazi is clear, and we do need to do as much as we can to protect it. >> i think you have to be a little bit fair here to the administration. look. as a former u.s. ambassador i take all of these issues extraordinarily seriously because these are staff who are putting their lives on the line every day, larry. the one thing that we have to understand, aim an al za hary is still alive. he issued a statement which we haven't heard from him now in several years. this is one of the reasons why

this threat has to be taken seriously. it's not thattal skada central hasn't been decimated, but he is like count dracula that keeps reinventing himself. he is still a theological inspiration to these franchise organizations. >> hillary clinton was wrong. it does make a difference what happened. we should know what happened. >> oh, absolutely. you have one network reporting that cia agents are being threatened by the organization if they talk about this. we have to know what happened there and what went wrong? >> that's a mischaracterization what you said. i want to get off that issue. her comment was really, it doesn't matter whether susan rice made a comment five days later about the talking points. that's irrelevant to the issue of how you protect american citizens in these stations, and i think you go back in history and you look in the reagan administration and there are 241 americans killed in the marine barracks and lebanon.

there have been embassy attacks including the clinton administration. this is an ongoing issue and it's terrible when it starts to get politicized by one party and one group of people instead of a focused need for us. >> can i ask you, you have all these embassies that are being closed down and consulates and so forth. what kind of military protection will these embassies have, right? these are mostly civilians and there's state department, cia, whatever, do we have to mobilize military forces to protect these embassies. >> central command has formed more quickly, but one thing everyone has to remember, larry, embassies are protected by the foreign military forces of the host country. the marines only protect the inside perimeter of the embassy.

>> we know we can't rely on most of the foreign forces. that's an easy one. that's why i asked the question. >> i am very glad to report to you that pentagon central command which covers most of the middle east as well as the african command have strengthened their capacity to expedite deployment to each of these embassies. >> great stuff. thank you very much. ambassador mark ginsburg. appreciate it. my free market friday panel will be back later in the show. coming up on kudlow, a disappointing jobs report for july. 162,000 jobs created, noter inially enough. too many part-timers, wagers falling. the fed can't taper until december or january. my complete take on that is coming up later in the show and then this -- the chris christie-rand paul feud getting very serious. will this infighting tear apart the gop or might it make it stronger for 2016? it's the libertarians versus the conservatives. we'll discuss all that and don't forget, folks. free market capitalism is the

best path to prosperity and we need freedom everywhere around the world. i'm kudlow. we'll be right back.

are you flo? yes. is this the thing you gave my husband? well, yeah, yes. the "name your price" tool. you tell us the price you want to pay, and we give you a range of options to choose from. careful, though -- that kind of power can go to your head. that explains a lot. yo, buddy! i got this. gimme one, gimme one, gimme one! the power of the "name your price" tool. only from progressive.

>> the economy added just 162,000 jobs last month.

badly missing expectations. july unemployment rate did fall to 7.4%. that's good, but below this there's a soft belly here, a softer report. half the jobs came from low-pay retail, restaurants and leisure. in fact, under the threat of obama care, so far year to date the economy has created 692,000 part-time jobs and only 220,000 full-time jobs and plus for july, weekly earnings and hours worked both declined, neither good omens for the economy. the fed, looking at all of this will not slow its bond purchases until december or maybe know. >> jan, but it's not going to be in september. anyway, here now is deutsche bank senior u.s. economist paul rick on thea and politico ben white. welcome back. let me start with you.

i see this soft underbelly to the report and we've seen a lot of this business about part-time jobs beating full-time jobs. >> it's not quite a zombie economy jobs report and it's sort of a walking dead at this point. this is not good enough jobs and the worst part of this report is 162,000 status quo overall, but as you med the point, they're not the high-quality jobs we'll see. that means we're not going to get a whole lot more economic growth the rest of this year and the one bright side to this is fiscal drag will come off a little bit and maybe that helps some, but we've got a huge washington cloud. >> hold that thought. i'm going to get to that thought. i want to go to carl on this. i don't know whether you share our view or not, but it isn't so much that 162 is 25,000 less. it's things like, you know, half the jobs that were created came from retailers and restaurants and it's the very low-end wages

and the fact that the part-timers are beating the full-timers. that's what troubles me. >> larry, in every economic cycle, the low-skilled jobs are the first ones that are shed in economic downturns and they tend to be the first to come back when the economy rebounds and we can also look at unemployment levels based on the level of college education. so the phds, tend to have higher quality jobs than someone who hasn't completed a high school degree and that's why there's such a higher level of unemployment in the demographic. it's been four years plus from the bottom of the jobs recession and it's been four years plus. we ought to be knocking out, frankly, 300,000, 400,000 a month in all of the industries across the board. what you're getting is the skewing of jobs the low-wage industries and not the higher-wage industries and on top of that is this whole business about part-timers

versus full-timers which i think has a lot to do with obama care because nobody wants him to work 30 hours anymore. they're dropping them down to 28 hour, 27 hours. if you do that, you can't make money and you can't make overtime because they're not working you. >> we saw jobs created in finance and manufacturing jobs which tend to have higher wage rates and benefits and we're seeing a fair amount of decent job creation. we should be seeing much higher numbers and the reason we're seeing such weak job growth overall is because economic growth has been lousy overall and half of the normal economic cycle. what's impressive of the jobs number over the last six or seven months, we've grown at a 1.5% pace, an average 200,000 jobs per month. larry, what will happen if the growth rate doubles? >> if it does. i don't know, if it does. let me go to that, if it does. the cbo predicted with the sequester that we lose

700,000-some jobs for the year. it doesn't look like that's going to happen. what do you think is going to happen with the sequester impact in the second half of the year? >> it will continue to be something of a drag and a lot of it depends on what they do when congress comes back in september. they'll have to decide, do they reprogram the sequester as part of the deal to run the government past october 1? do they do that as part of raising the debt ceiling, too? both parties would like to figure out a way to fix the sequester and take the drag factor out of it. i don't see the path factor out of there. the republican party is on how much you cut and do you de-fund obama care as part of the process. it increases revenue for more programs. >> where do you get a deal that does that? even the president's people are threatening shutdown. >> they want higher revenues, higher taxes and they want to get it right and they want to get rid of the sequester. that stuff could shock

businessmen even more. right now they're worried about the impact of obama care and that's been delayed a year for businesses on the mandate. when this washington stuff starts rolling around you may get less and they may huddle masses and take their cash and not hire anybody. it worries me! >> the sequester was a lot of bark and not so much bite. we see that bite diminishing in the gdp numbers earlier this week and we also see it dim inearning in the jobs number. the federal government actually created jobs. >> i happen to think spending cuts are really good for the economy. as a supply sider it limits the government -- >> and the stuff ben's talking about, if you can get shutdowns and you have to mess around with the debt ceiling and both political parties are not together yet, it's a whole new game.

>> it's been a huge catastrophe for the economy. i suspect that will be the case again. >> we've got a downgrade from standard & poor's and we have a market sell-off. >> we didn't have a shutdown. >> i just think there's a soft underbell toe this story, and i think that's what we have to focus on. we're not in a recession. i'm not saying that. i'm just saying things are softer. >> you get tax reform, that would help a lot. >> oh, bless you! you can come on the show any time you want! >> bless you. repatriation, too. thank you ever so much. would you work if you didn't have to? why are high-income people still working well into their 70s? we'll get that story from robert frank. he's our resident expert on the rich next up on "the kudlow report."

uh-oh! guess what day it is?? guess what day it is! huh...anybody? julie! hey...guess what day it is?? ah come on, i know you can hear me. mike mike mike mike mike... what day is it mike? ha ha ha ha ha ha! leslie, guess what today is? it's hump day. whoot whoot! ronny, how happy are folks who save hundreds of dollars switching to geico? i'd say happier than a camel on wednesday. hump day!!! yay!! get happy. get geico.

time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. it's time.

all your important legal matters in just minutes. protect your family... and launch your dreams. at legalzoom.com we put the law on your side. >> big money is working overtime. a new study shows that people making over $750,000 or more don't retire until they're well will into their 70s. cnbc's robert frank joins us now with the details. good evening, robert. >> thanks, larry. it turns out the leisure class is turning into the workaholic wealthy. a new survey from spectrum shows that those making $750,000 or more have the highest planned retirement ages.

nearly a third of them don't retire until they're 70. only 6% plan to work. 60% of those top earners say they never plan to retire. most plan to retire before 65. so why are aren't the rich retiring? well, after all, they are the group that cana, ford to stop working, but most of these top earners are entrepreneurs. they are more likely to credit hard wok for their success and they like risk. as entrepreneurs their life is their company and their company is their life. this to them is not work, it's fun. it's what they like to do. you think of david murdoch still running dole food at 90 or john malown at 72 or steve wynn overseeing his casino empire at 71. the dream was to get rich and retire at 40 and now it's to get rich and work past 90. back it to you, larry. >> great stuff. many thanks to robert frank. work is a sacred thing. up next on kudlow, rand paul

calls chris christie the king of bacon. christie then calls paul a washington insider. paul says now let's have a beer, but christie says he's too busy. will there feud tear apart their republican party? our free market panel will debate that next up. so... [ gasps ] these are sandra's "homemade" yummy, scrumptious bars. hmm? i just wanted you to eat more fiber. chewy, oatie, gooeyness... and fraudulence. i'm in deep, babe. you certainly are. [ male announcer ] fiber one.

and this park is the inside of your body. see, the special psyllium fiber in metamucil actually gels. and that gelling helps to lower some cholesterol. metamucil. 3 amazing benefits in 1 super fiber.

>> get this, folks. seems like the 2016 presidential campaign already under way and there's a feud brewing for the heart and soul of the republican party. new jersey governor chris christie threw the first punch last week. he's bashing libertarian leaning and isolationist republicans like senator rand paul. paul was quick to fire back. take a listen. >> i want them to come to new jersey and sit across the widows and the orphans, and have that conversation, and they won't because that's a much tougher conversation to have. >> it's really kind of sad and cheap that he would use the cloak of 9/11 victims and say oh, i'm the only one who cares about these victims. hogwash! >> maybe he should start looking at cutting the pork barrel spending that he brings home to kentucky because most washington politicians only care about bringing home the bacon so they can get reelected.

>> this is the king of bacon talking about bacon. governor christie and others have been part of this gimme, gimme, gimme. >> whoa! okay. there you have it. the fight is exposing deep divisions within the gop on national security and federal spending and other stuff. just how fractured is the party. let's bring back the free market panel and as a former congresswoman, i believe you are running for reelection. this is inside the gop story. you have the libertarian isolationist wing of the party and you have the most internationalist wing of the party. how do you think this is going to turn out? do you think christy wins a clear fight here or do you think the gop is changing and will compromise? >> as you've said, larry, in essence, these are two sides of a coin, if you will because both sides are very concerned about

making sure that americans who cherish the freedoms that are respected in our constitution can live in a world that's full of perils. there are perils that are on our shores and those without. so we have an embarrassment of riches in the republican party right now. >> when you say, we all want to be safe and secure, but the whole issue here and the beginning issue here is about the nsa data and that is when senator paul went ballistic and chris christie went ballistic back. so after iraq, after afghanistan, after, after, after. we've got syria, we have iran and egypt right now. does a senator rand paul who is more from the libertarian isolationist wing, does he make a little bit more hay on this than say a john mccain or chris christie wants him to? >> clearly, rand paul and chris

christie are both very talented public servients. these are both men who can provide leadership on these issues and this is the kind of debate that i am confident to have in the hands of people like this. we really do want -- you don't want to answer the question. >> they're the kind of guys -- >> i want to see if they both come and campaign for you. after that non-answer you should have christie and you should have senator paul campaign with you. keith boynkin, who will win this battle? >> not the nan hayworth battle, but the battle with the party. >> i think right now the libertarians and they're wing. chris christie is not even a part of that. you have people like mike leigh, ted cruz and rand paul. >> those are libertarian, but they're really the tea party people, against the john mccain establishment wing of the party. if you look at mike leigh, ted cruz and rand paul, they have a collective five years of

experience between them and they're the ones running the gop right now. >> we had senator cruz on, and i may not agree. >> he wants to eliminate obama care, okay? i do, too, but i wouldn't defund obama care because i think that gets you into government shutdowns and all kinds of debt limitation issue, but nonethele nonetheless, they've got 11 votes in their party and they may get more on this. that's what i'm saying. the infiltration of the libertarians. that's really what i'm saying. >> that's why i'm saying it's dangerous to the republican party and to the repiblic at large and when you look back at the reagan administration, when tip o'neal was chairing the house and the democratic house, we were passing 600 bills every session. you know how many bills they passed in the last session? 238. you can't get anything done in this congress. there's complete anarchy and complete chaos and it's the prevention of the republican party. >> it's less bill, but more

legislative pages and they're packing more things. >> in terms of the number of bills that weren aekted. only 238 bills were enacted in the last congress. >> with the equivalent of 600 bills. >> but the reason that senator paul and governor christie are getting so much attention right now is because they are hitting cords with the american public. >> they are. >> they are finding ways to represent what americans are talking about. >> tactics aside, obama care is a bad issue for the democrats. it is so unpopular. >> absolutely. that's really the heart and soul of this thing. senator paul was a filibuster and i think he and cruz and lee and some of the others you mentioned, i think they are making a difference and maybe more on the domestic spending side and the obama care side than on the international side. >> and they both win here. paul looks great on the base attack with the northerner, the yankee and the moderate and christie looks good, but i think

in 2016 if paul thinks he's going to do anything against christie is not going to happen. people are sick of politicians who just talk and don't act and we've seen too many peculiar guys in politics especially here in new york. >> peculiar? >> from weiner to spitzer and i don't mean to put rand paul in that category. >> those are democrat, but paul has a peculiar quality to him. >> he's a smart guy. >> but christie looks like the guy next door. he's a prosecutor and the governor. we need a governor who has actually done something in the white house. >> i happen to agree with you on that point. i've been saying for at least a year that chris christie is the best candidate for the republican party in 2016, but nobody's going to listen to that. >> let's go there. that's the second part of this thing. we'll ask who is ahead in the gop presidential sweepstakes right now. who's ahead? i know it's early, and i am going to give it back to you. i think if the nomination were

held right now, if there was a super primary way loss of a lot of smart people, right today chris christie would be the front-runner in the republican party. >> i don't know. i'm not in the republican. i would hope they would be smart enough to pick him, but i don't think him, i think someone like marco rubio or ted cruz would be more popular because they want the flame throwers and the people who are causing the ruckus and they don't really see, even though chris christie is doing that in new jersey and he's not doing that in the national level. >> he is great at smacking president obama. the guy is tremendous. >> and he said he was a prosecutor. >> he was a prosecutor, but he's not one of those guys -- he can talk a good game, but he's not selling trance -- he's not voting 40 times. >> 45, 50. i'm okay with that, too. >> 40 times to repeal one piece of legislation as the american people? >> we're trying to stop a train wreck. >> you are trying to make a train wreck. >> paul ryan will be the

chairman for the ways and means committee, i don't think. i don't think rubio is quite there yet and he has to contend with jeb bush in florida. you can't have two people coming from florida, rick perry from texas may be a threat also. senator cruz, i don't know, they're all from texas. i think scott walker. i'm going to throw this on the table. scott walker who is christie of the midwest, okay? more mild mannered, but he won and he's won a second time in his recall. he beat the unions and beat them bad and pickal conservatism and he'll win the third race and i'm going to put scott walker in second place behind chris christie right now in the gop sweepstak sweepstakes. >> by 2006 you'll have a real executive and people are going to be sick of corruption. so the former prosecutor part of christie might give him an edge and you have a dozen really successful governors in the republican party. >> he couldn't carry wes wiss from mitt romney. >> that was not scout walker.

that was -- that was a whole different campaign. >> they're both more conservative than mitt romney and they're both more conservative than john mccain which is better and already we can see it better. >> every time there is the campaign for loss. >> i have to get out of here and we'll have to see what bill and hillary have to say about that. we have more work to do. up next, investors seem to shrug off another report. another day, another dow on the s&p and we'll explain what the marks have next week and that's next on kudlow. [ male announcer ] ah... retirement. sit back, relax,

pull out the paper and what? another article that says investors could lose tens of thousands of dollars in hidden fees on their 401(k)s?! seriously? seriously. you don't believe it? search it. "401(k) hidden fees." then go to e-trade and roll over your old 401(k)s to a new e-trade retirement account. we have every type of retirement account. none of them charge annual fees and all of them offer low cost investments. why? because we're not your typical wall street firm that's why. so you keep more of your money. e-trade. less for us. more for you.

has oats that can help lower cholesterol? and it tastes good? sure does! wow. it's the honey, it makes it taste so... well, would you look at the time... what's the rush? be happy. be healthy. >> well, a soft jobs report didn't stop zig-zagging stocks from fin earning in the green today. the dow was up 100 points to close at 15,658. the nas gained 76 points to close at 7690 and the s&p 500 stayed over 1700, up 18 points and closed at 1710. that's big stuff. so even with this rally, could it be that stocks are actually undervalued? i'm going to come back to that theme in a second. could this be some sort of mini down-sized goldilocks situation?

let's talk. we have carol roth, cnbc contributor, author of the entrepreneur equation and the motley floor and allen valdez from dme securities. carol, i want to begin with you because i want to put the fed aside. no namesake, but he said to me, look, the overall market at 15, 15.5 times earnings is undervalued and he said when you look at stocks and he was very specific. ibm, apple, google, intel, j.p. morgan, citi. stocks like that are all undervalued and they're all 9, teb, 11 times earnings can go much higher. what's your take on that point of view? >> listen, larry. there is a huge disconnect here in terms of what's going on in the economy and what's going on in the market, and i know you want to put the fed aside, but i don't think we can put the fed aside because the fed is driving

the valuations in the market. the market valuations should be based on growth and the elephant in the room is that we have no growth. we have sluggish growth and in 2013 the economy is not where it should be and not where it needs to be. >> but that's been true for four years. that's been true for four years. >> exactly. exactly. >> this is the worst growth recovery since world war ii. no question about that. on the other hand, profits have carried the ball nicely and interest rates are low and yet the fed is going to -- i think it's not coming until the end of the year and maybe the beginning of next year and the fed will taper its bond purchase. the idea that valuations are okay. the overall market may be 15.5 times and these great individual stocks like j.p. morgan, for example, or google or apple, they're 9%, 10%, 11%, 12% and they should be much higher than that. i think that the market is

pretty fairly valued and again it goes back to where those earnings are coming from and the quality of the earnings. the earnings, as you know, larry, are coming from things like shared buybacks and cutting down on the sgna and they're not being driven by topline revenue and that means when you look at the growth rate for the future and unless you have that increase in revenue over and over and over again, it cannot sustain growth multiple and i think it's fairly valued. >> i go to the same point with you, a valuation issue. what's your thought? >> i have to agree with carol, and i have to -- i knew i shouldn't have gone down this road. i think it's a different market than when you and i first got into this market. it's so dominated by programmed trading. people looking for those major corrections, they don't get it and they take the stock back up. they take the whole markup. look at the s&p that you mentioned. over 1700 and it will drift higher so that skews the valuations because these programs dominate by some

account, 70% of all of the trades on the tape are program trading. >> would you be selling into this rally? >> no. i think you can see the s&p go to 1750 by the end of the year. >> all right. 1750. andy, i go to you with essentially the same idea. the only thing i'll embellish here is carol's right, you have a lousy recovery, slow recovery and earnings have slowed down also. the fed is easy, but it's sort of like a mini goldilocks. i don't know what to call it. sort of a down-sized goldilocks and i'll add that there's no characterization, is that a fair characterization that everyone loves to hate and it keeps going up? >> i think everyone loves to hate this rally here, larry, and i just look at what companies in the u.s. are doing and how efficient they're doing it, how their profit margins have expanded and how they'll improve their business.

you may not have seen the top-line growth overall that we expect, but there are a lot of amazing companies. look at the quarterly report that starbucks put out. 9% comp growth in the quarter. it was amazing and there are pockets of the market where investors who have a long-term perspective and don't focus so much on what's going to happen next week or next quarter, but for the long term, and there are great investments and i think they want to continue to invest in the market. >> larry, can i jump in there on that? because here's the issue. they're doing this and they're getting these great efficiencies at the expense of the average american and what's happened is we traded off some nice paying jobs at the beginning of the recession and we've now traded those for part-time jobs and low-paying jobs and temporary jobs which means the average american doesn't have money to go out and consume. >> we spent the second segment of the show on this very point and these were part-time jobs and it may have to do with obama

care and profit margins. i absolutely agree, but here's the point. it doesn't seem to be stopping stocks from rising, okay? not the fed and not the lousy jobs story and nothing seems to be stopping stocks and that's what i'm trying to get at. why is that, carol roth? >> i think even if they're going to taper, tapering doesn't mean stopping and i think that there's going to be quite some time especially as this sort of sluggish economy news keeps coming out that the fed's not going to have any reason why they need to completely cut off the printing press, and i think that's what's driving the markets. >> i'll end with that. >> it may take the fed and this is -- we're in the middle of the summer of 2013. the fed may be characterized as ea easy, easy, even if the fed funds rate went up a little bit for a good three more years. what does that do to the stock market? s&p, 1700.

it will give you three more years of zigging and zagging higher and that's a hell of a thing. the dow jones, same thing. there's no end to this. >> no, there isn't, and i'll tell you, the best house in the worst makerneighborhood. where else will you go with your money? that money has to find its way with the stock market. it's the only game in town so that will keep feeding on itself and as long as the fed keeps injecting $85 billion a month and even if it tapered to 85 billion and look at the ten-year today. nothing happened. >> nothing happened. it opened up and the rates came back down to 260. andy cross, i'll give you the last word. not until the fed truly changes its posture to tighter money will this thing end and that could be years away. do you agree with that or not? you get the last word. >> i do agree. until the fed starts, forget about the tapering, per se and it will start to see, that will

be a challenge for valuations and the challenge for the stock market, but so far they've navigated this pretty well and better than most people expected and that's why stocks are at an all-time high and i continue to see them rallying here for the near future. >> carol roth, shaking her head. i love it, we'll have you come back and you can continue to shake your head. everybody shakes their head. i sometimes shake my head and it doesn't matter. the market goes up anyway. andy cross, allen valdez, i appreciate it. >> up next, congress and its staffer have just exempted themselves from the obama care rate shock that the rest of us are going to face. this is blatantly self-serving and more cronyism in washington, d.c. we'll explain this after the break because it burns me up. and 900 million dollars are changing hands online. that's why the internet needs a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less.

it's called hp moonshot. and it's giving the internet the room it needs to grow. this ...is going to be big. it's time to build a better enterprise. together. and this park is the inside of your body. see, the special psyllium fiber in metamucil actually gels to trap some carbs to help maintain healthy blood sugar levels. metamucil. 3 amazing benefits in 1 super fiber.

unfortunately, congress does not want to eat its own obama care cooking. now it looks like they won't have to upon. the white house office of personnel management is set to rule that the government can continue to pay the 75% subsidy for all those gold-plated health care plans that congress and its staff doesn't want to give up. meanwhile, the rest of us will suffer obama care rate shock most of the time. this is insiderism at its work pft mark simone, i go to you. i cannot believe that they're pulling this off. >> of course, i believe it. no interviewer has ever said that barack obama, if this plan

is so good, why have you given everybody you know and like unions, companies, a waive tore get off it? you've given out thousands of these waivers. if it is so great you should be give know a pass to get out early. no one explains that. >> as i said, this is insiders, because in most states, most people will have premium rate shock. these guys in congress, their staff and the members will not have premium rate shock. i asked you because to me this is just all wrong. you should eat what you cook. they cooked it, they should eat it and pay it like the rest of us. >> i would cook a completely different cake. the american people know this is a bad deal for them and we can do so much better. democrats are recognizing this is a train wreck in the making and we have an opportunity not to point fingers and not to play politics, but thou do they exempt themselves. i don't like obama care and i

want to repeal it, but how can this congressional people, how can they exempt themselves and give themselves a special class? that's why i call it insiderism, that's why people are so pissed off at washington. >> they went into panic and they freaked out. >> i think this is hypocritical at its worst. i live in new york and in miami, and i know that here in new york the insurance rates will actually decline by 50%. that's because you've had a monopoly the whole time and it's because they've had regulations here and they'll decline by 50% in new york state and i used to be part of my work in washington and the white house. >> that's a great plan. great plan. >> nobody in america is getting those benefits. >> you're exactly right. you don't get the benefits and you don't get the subsidies. the government, i.e., you, the taxpayer, mark simone, have to subsidize this fabulous plan for

members of congress and their staffs. >> that was the quickest action i've ever seen from the federal government when they thought they would have it --? they were panicked. >> tell us the reason that everybody else gets away with it. >> i have to get out of here. our panel was great tonight and nan hayworth and mark simone and everybody campaign for nan hayworth because she won't say a bad word. thanks, everybody. i'm kudlow. i'll be back monday. i sometimes do say bad words. have a great weekend, everybody. u to eat more fiber. chewy, oatie, gooeyness... and fraudulence. i'm in deep, babe. you certainly are. [ male announcer ] fiber one.

all your important legal matters in just minutes. protect your family... and launch your dreams. at legalzoom.com we put the law on your side.

[ sirens wailing ] >> a war is raging in mexico's border towns as rival drug cartels battle for control. in a scene of horror. the mexican government has declared its own war on the drug barons. it seems powerless to stem the tide of bloodshed. [ sirens wailing ] >> [ shouting in spanish ] >> the drug gangs here are as heavily armed as the security forces. not in a million years would i expect to find something like this here in mexico. people come here on holiday. thousands have died or simy