to the senate, even perhaps a one-week budget bill to give some breathing room. also about to talk strategy with senator rand paul. what exactly does he want? where's the end game on obamacare and the economy? and what about the debt ceiling deal? by ceiling deal? by the way, treasury secretary jack lew now says the government will definitely run out of money on october 17. and what about obama care premiums? today the administration said their cost would fall 16% below projections. but our expert says those costs are going to blow sky-high and double for most states in the union. all those stories and more coming up on "the kudlow report" beginning right now. good evening, everyone. i'm larry kudlow. this is "the kudlow report." we are live here at 7:00 p.m. eastern and 4:00 p.m. pacific. and right now this is the top

story. after 21 hours on the senate floor, texas senator ted cruz wrapped up his brave and courageous obama care filibuster today. that said, the debate and the political standoffs are far from over. the real voting is about to begin. cnbc's chief washington correspondent john harwood joins us now with all the details. good evening, john. >> good evening, larry. we had an unusual end to that filibuster which you called brave and courageous. 100 people voted against it, including ted cruz himself. it became so unpopular by the end, that ted cruz decided to go with everyone else, seeing which way the wind was blowing. what we're going to have now is a debate in the senate over stripping out the defund obama care provision. not sure exactly when that's going to happen. but cruz has indicated he may shorten the time and not drag it out all the way to sunday. many republicans wanted him to shorten it so that the house will have more time to send a counterplay back to the senate.

but it does appear that on a partyline vote, the democrats are going to strip out the defund obama care provision. the senate will pass a clean cr extension of government funding through mid-november. then it will go back to the house and we'll see whether there is more ping-pong or whether the house simply extends government funding. and then we replay this fight, larry, on the debt limit, which as you mention, is going to ripen on october 17th when jack lew says the treasury balance will be down to $30 billion. and that's when they consider that they need to have the debt ceiling raised, otherwise they can't account for what may happen on a day-to-day basis. >> john, i don't think there was 100 votes against cruz per se. i think cruz was just playing along with the procedure. but here is what i want to ask you. what you hearing through the grapevine? i'm hearing that the house has a plan b, and they are going to ping it back to the senate. and in order to buy some time or some breathing room so we don't shut down the government, they're going to offer a

one-week continuing resolution. what can you tell us on that? >> well, first of all, the quicker the senate acts, the more time the senate -- the house has to figure out a strategy. and one of the reasons why republicans press cruz to cut this short was that if the senate were to send the house bill on sunday. that would just have 24 hours before september 30th when the government runs out of money to do something. if they send it back tomorrow or friday or saturday, then the house has an opportunity. it could be delay. what gets attached could be a delay of obama care. it could be repeal of the medical device tax, which is something that democrats and republicans don't like. that's something that could conceivably become law. but i think it is clear that the house does not have appetite for a shutdown. and the question is how do they get out of this box when it comes to the debt limit in two weeks. >> all right. we'll leave there it. many thanks to john harwood. so will the cruz talk-a-thon

change any minds on capitol hill? take a listen to senator cruz from earlier today. >> i hope that this filibuster gave the american people an opportunity to express their views and to engage in this debate. the american people are being hammered by obama care, the biggest job killer in this country. at this point, i very much hope that all 99 colleagues in the u.s. senate -- >> come on. >> will listen to the people. that is not likely. but i can maintain hope. >> all right. that was cruz from earlier today. now, we're going to go and talk to senator rand paul who -- who i think -- i think -- i think -- here comes the tape. joining us no kentucky republican senator rand paul. senator paul, as always, welcome back to "the kudlow report." i want to ask you about the ted

cruz thing. after what i thought was a very courageous and brave whatever, 21-hour filibuster, do you think he changed any minds in the senate, whether it's republicans or border state senators or red-state senators? did he change any minds? >> well, you know, i think the american public is with us in this battle. and sometimes the american public is about a decade in advance of the legislators up here. so i think the senators are behind. i think a few senators are coming our way. but i would say that the senators maybe aren't quite hearing from the public now, because the public really is against obama care and thinks it's bad for the country. >> will the republican senate conference or caucus welcome ted cruz back in? you hear about acrimony and dislike and anger at him. the guy really tried his heart out to make a point about obama care. will the republican senators welcome him back in? >> absolutely. i think some of that is

overblown. you know those people in the media. they try to make things a little more than they are. so i think it's not as bad as some have said. and i would say that the one thing that actually unifies us as a caucus more than anything is that we're all opposed to obama care. we're all opposed to funding it. we have been opposed to it from the very beginning. not one republican voted for it. so really, it's actually something that unifies us. >> all right. let's get down to some brass tacks. in another interview, a recent interview a couple of days ago, you said guarding the continuing resolution to date, you were willing to compromise. you used that word compromise. and i'd like to ask you what you meant by that. what would constitute a compromise? >> the president is getting 100% of what he wants. he is getting obama care passed only by democrats, no republican input. so any compromises would be him acknowledging they made some mistakes. i think the medical device tax is a mistake, and i think it will lead to inhibition of

innovation in our country. i think that forcing people, individuals and employers to do this is a mistake. ehas delayed the employer mandate. maybe he could be convinced to compromise and delay the individual mandate. or maybe the whole thing is so complicated and rife with so many problems for the future that maybe we delay the whole thing for another year. those are what i have in mind when i talk of compromise that are short of defunding, which i'm still in favor of. i think -- and i won't vote to fund it. but if we don't get quite there, maybe the democrats would agree to fix some of the problems that i think it's going to create. >> all right. that's heartening. let me ask you there is talk today coming out of the house and the house leadership. i mean, a lot of the discussion, nothing is written in cement. but there is talk today about putting up the congressional exemption, congress and its staff should not be exempt from obama care. that they're going to send the cr back to the senate and insist that that go in.

would you back that? >> i don't want any part of it, larry. i don't want obama care. please don't make me have obama care. but if i'm going to get it, just as roberts should get it too and so should president obama. so if they make me take it, i want justice robert there's with me. i want him to come over and sign up at the same exchange, and i want president obama to come on down from the white house, and he gives up any kind of employer subsidy he has, and he signs up for obama care too. if we do it for all federal employees, i'll vote for it. >> all right. you'll buy into that. the other thing that is being rumored, as you mentioned before, the individual mandate, there is talk that the house will send the cr back to the senate and include the individual mandate. so i assumed you would rally for that? >> well, here is my prediction, larry. something is going to happen in the next couple of hours that nobody has any idea was going to happen. i think there may be some other

way that the democrats are going to get this thing derailed in the senate. it's different than any of the votes we've been talk about. >> what do you mean on that, senator? what are you talking about? >> i think there may be some other objections. i think there may be a procedural objection to the whole thing going forward. i don't know this yet, but thing is a possibility that somehow it finals a procedural on jectibje. that's the rumor i'm hearing. >> that would take longer to fix and bring us closer to a shutdown, would it not? >> maybe. it means maybe we bounce around a few more times until there is a final resolution. i'm not sure what happens, but i do know there is a lot of procedural vote, even in the mix that we're talking about that make it very confusing for the public to understand. >> heck, it's confusing to me, and i served four years in the executive branch. but let me just ask you. these procedural issues about votes, 60 votes versus 51 votes? >> i think there may be some people complain about this not

meeting things like the budgetary caps, things about whether or not they have exceeded limits that are in the sequestration. >> i am told that, by the way. i heard that. in fact, i heard that this afternoon. in fact, circumstances i heard that the house version of this deal is actually, i don't know, $20 billion above the budget caps in the sequester. and that the senate version is going to be, i don't know, 50 or 60 builds. this would even be i think for just one year, beginning with this cr. so you're in violation. you'd be in violation of the sequesters. that's what should stop everything. >> and what i've been saying all along is the sequesters have been the one thing that has proven that we can at least try to restrain the growth of spending. and it's been a good thing to see, guess what? the planes are not crashing into each other. the meat is not rancid. we still have meat inspectors. we still have air traffic controllers. so i think really exceeding the sequester is a bad idea.

and so it's confusing to a lot of us who really oppose obama care. what do we do if there is an objection raised saying oh, but it exceeds the sequester. so now you're willing to spend more money, but you're going to get rid of obama care at the same time? that's a bit of a confusing issue. >> that's part of the problem. and as you know, senator reid pulled back even on the length of the continuing resolution. it's supposed to run through december 15th. he wants november 15th. and a lot of us suspected that's because he wants to put some more spending in. the last one is one of the options on the table there is talk about one year ending the sequester, delaying the sequester for one year while you delay the individual mandate. does that work for you? >> no. i won't vote to delay the sequester. that's a big mistake. and really, what we have to keep in context of the whole thing, larry, this isn't just about obama care, it's also about should we onto to borrow a trillion dollars every year. we have a $17 trillion debt. we're borrowing $30,000 every

second. and so when we say it's just a cr, it's just $988 billion, realize they're spending your kids' money and your grandkids' money, and they should be ashamed. and this shouldn't be about shutting the government down or even about obama care. it ought to be about not spending more than we're taking in. that's what we ought to do. >> and the economy at large. e whole economy for that matter, which has been sputtering for years. senator rand paul, kentucky republican, we appreciate your tile, sir, very much. >> thanks, larry. >> all right. as always, many thanks to senator rand paul. now, we're going to talk about a bunch of things, including the violation of these budget caps put in law through the sequester that may screw up the entire negotiations of the continuing resolution. and we want to talk about senator cruz and how unfairly cruz has been treated by the mainstream media. and we're going to debate the crucial coming battle over the debt ceiling with an all-star panel of experts. all that just ahead.

later in the show, the markets are on a slow drip five-day losing streak. but i'm starting to get more bullish on stocks right now. i say buy the dip, and i'm going to try to explain why later on. please don't forget, free market capitalism is always the best path to prosperity. that's why those budget caps are so important. less government, more growth. i'm kudlow. we'll be right back. [ male announcer ] this store knows how to handle a saturday crowd.

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welcome back to "the kudlow report." i'm jackie deangelis. you can see a drop of more than a dollar a share right at 1:30 after reports say walmart was cutting orders because it has too much inventory. in a statement to cnbc, walmart called the story misleading, saying that the company is constantly managing hundred of inventory levels, the levels of which can change all the time. you can see the stock rebounded after that, larry. >> thank you very much. welcome back to "the kudlow report," everybody. we are broadcasting live from cnbc headquarters. guts, courage and character. that's what senator ted cruz has, i believe. he stood up for 21:16 because he is passionate about a cause that not only impacts the base that voted for him, but all

americans. but cruz has not escaped criticism for his crusade. his efforts harshly dismissed as little more than grandstanding by many in the media. i say everybody should do their jobs with the kind of integrity that ted cruz showed. but let's ask our guests on this and other matters. here now is democratic analyst mark hanna. also a former campaign aide for both john kerry and president obama. robert costas, cnbc contributor and washington editor for the national review. and lars larson, nationally syndicated radio host. gentlemen, help me out here. bob costa, i must go to you first. at the very end of my interview, i don't know if you heard it, with rand paul, he said there are going to be procedural problems there is overspending. they have broken the sequester budget caps, which actually not only can you not do, because it breaks the legislative rule, but it stops all kinds of other votes. i just want to read this, because i had it in my notes,

courtesy of steve moore of "the wall street journal" editorial board. the spending cap for this coming year 2014, discretionary spending sequester, $967 billion. okay. in the house, they put down $988 billion, roughly $20 billion above the level. and in the senate, apparently they're coming in at over a trillion dollars, a trillion 5 0 50 dollars, about 75 or $80 billion above the caps. bob costa, this throws a monkey wrench into the whole story, because no one was disputing the spending part of this. the dispute was about the funding of obama care. what do you make it? and do you hear anything about it? >> here is the real story, real briefly, larry. the cr that ted cruz was fighting against that had the defunding in it, now that defunding got taken out by harry

reid. ted cruz had probably only 10 to 15 republicans on his side. because the spending numbers have been messed up by harry reid and the democrats, that number may inch up 15, 20, 25, maybe 30, 40 republicans now vote against harry reid, working with ted cruz. >> so what will happen in that case then? is the deal off, or might defunding actually pass? >> i don't think defunding will actually pass. the votes are still not there to defund. it gives conservative a lift. and ted cruz has buzz behind the scenes for stopping this cr. >> i want to come back to this narrative in just a minute. because the house is going to take some action in the next 24, 48 hours too. i want to go to my pal, lars larson. you know, lars, you listen to some of the mainstream media liberals from various news organs we all know about and ted cruz is some kind of crazy, demonic crazed right-wing guy. i didn't happen to agree with his defunding plan.

i want to get rid of the individual mandate. but i've watched him and know him very well. he was brave. he was courageous. he was cogent. he showed character. he showed integrity. and frankly, lars, whatever you think of the tactics here, he is doing what the voters of texas, particular the tea party voters want him to do in washington. >> that's exactly what he was doing. it's what a lot of americans have been hoping somebody would stand up and do. and the fact is ted cruz, as you said, is courageous. but better than, that he is one of the best speakers in that body at this point. to communicate for so long, and i got a chance to dip in and out of the filibuster, whatever you want to call it, the long speech last night, all the way through the night and into the early morning hours today, he really communicates well. and actually, for a body full of people who are supposed to be well spoken, he showed himself to have absolute skills far and above the crowd. and that is what america has been hoping for, somebody that will actually champion this cause. most of america wants obama care

gone. >> that's the thing, mark hanna. let me make two points. number one, cruz was basically sent to washington by his constituents in texas and by his base to shake up things, okay. that's basically one of the key parts. and that he certainly did. the second part, which lars said, he just spent a whole day plus, and he has had several days all week getting tremendous publicity, front-page story, this filibuster, on the evils and unpopularity of obama care. obama didn't get that press. harry reid didn't get that press. nancy pelosi didn't get that kind of ink. it was ted cruz who made his points. and i think he scored. andrew blood. >> i think ted cruz did a fabulous job of draw attention to himself. i'll agree with you on that, larry. look, this is man who is seen by

many in the mainstream republican party a future leader of the republican party. what ted cruz has accomplished in this all-night filibuster is drawing himself into an ideological rant that further marginalizes himself, has no chance of passing this defunding. i mean, republicans have done this dozens and dozens of times. this is a last-ditch desperate effort to hijack the american budget for one political issue that is the law of the land. and this is unprecedented larry. >> you ever see how bad? let me be specific, because this is where i wanted to go. >> over 50%. >> you ever see how bad the individual mandate polls with taxes and its specifications and its lack of verification. >> i'll tell you. >> no, mark. you can make cheap shots at ted cruz. but i want to tell you. take a look -- >> they're so easy. >> take a look at the data point. people can't stand this personal individual mandate. here is a data point. your response to it. >> larry -- >> you know it's a poll shows.

i want you to tell hannah some numbers, because hannah doesn't read numbers. >> let me just say this, cnbc's own poll has about 60% of americans not wanting the american government to shut down because of this obama -- >> that's a different subject. >> that is a completely different subject. and nobody including ted cruz wants to shut down the government. you're avoiding the issue. go ahead, bob costa. >> the white house is banking that the republicans are going to stumble here and they're making a poor argument. i think ted cruz, he may be on to something. frustration over obama care is growing. and he believe there's can be a grassroots movement somehow that builds against this law and forces the white house's hand, because he smelled weakness. when the president delayed the employer mandate, if he did that, maybe he'll delay the individual mandate. >> let me follow up. bob costa. in the next 24 to 4 hours, robert, there is a very good chance the house leadership will create what i'm calling plan b, okay. so whenever this senate passes the cr back to the house, whatever it's going to happen

here, if it does, i don't know, this budget-busting may stop it. it's going to be something. what i hear, either the house is going to ask for a deal on a one-year delay of the individual mandate, or the house is going to ask a deal to end the exemption that congress and its staff has from obama care. what can you tell us about that? >> larry, i just walk heard from the capitol. i was outside speaker boehner's office. they had a meeting tonight at 4:30, talking about what they're going to do. they will punt another cr back to the senate. they're going to finalize the plan tomorrow morning. it will probably a one-year delay of the individual mandate. if not, that's something similar like you mentioned, a delay of certain provisions. they really believe if they go to the 11th hour, they can force the white house's plan. >> lars larson, i'm going to say this. we've got to close down. i think what cruz did really mobilized american -- >> yep. >> and americans' psyche. so that you see it. the people, the politicians closest to the grassroots are

the house members. and the house members are not -- they're going to come back with some kind of plan b, and they are going to say we'll make a deal with you, but you, mr. obama, have got to give something up. that to me is the beauty of what cruz really did. >> yep. and mark hannah is a good example of the kind of elites in washington who care what the other elites think and they care what the media think. i think cruz showed he is in tune with the american public. the american public wants this thing gone. they hate this. and they haven't even fully experienced the real train wreck that's coming at them. you know what's in there. higher rates, miscommunication. you can't get to a doctor. you can't get medical care. it's a disaster for the democrats. and the republicans know it. and thank god none of the republicans voted for it way back when. >> let me respond. >> we'll give you the last word, mark hannah. >> over two dozen times congressional republicans have tried to rescind, refute, to defund obama care. and over two dozen times the american people -- >> god bless them. >> through their elected

representatives have voted down that legislation. so the american public has spoken. >> the senate has never voted on this. >> look -- >> this is the first time the senate has actually voted on anything. see, that's the thing. >> we will know next week when americans start going to their statewide exchanges and buying affordable health care that will give them health security once and for all. >> we'll see, all right? we don't govern by polls. i understand that. i want to see these votes in the senate on these specific issues on defunding. i want to see the vote on congressional exemption from obama care. i want to see the vote on delaying the whole individual mandate. i want to see actual senate votes. and i'm real interested in certain red state romney state senators and see what they do. but i got to get out of here. mark hannah who sometimes reads polls, lars larson, thank you. robert costa, always great to see you. now, could jpmorgan be

forced to cough up an incredible $11 billion to the feds? that's the latest number being thrown around. jackie deangelis has the details in our market flash, next up on "kudlow." ♪ norfolk southern what's your function? ♪

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leading up to the financial crisis. now, a source tells cnbc that the $11 billion number is in 2 zip code, but negotiations are ongoing so, it could change. jpmorgan's stock was up nearly 3% on the news today. larry? >> up 3% because people thought it was going to be worse? >> because they like the fact that the bank may be putting it behind them and moving forward. so yes, it would have been worse if they went to trial. >> i get that there is still a battle going on in london over the whale and the whale's two trading assistants and nobody knows how that's going to turn out. i just wonder why uncle sam wants to wage war against jpmorgan. but maybe we'll learn. thank you very much. we'll have more of your market flashes throughout the show. but now, the obama administration proudly rolled out the prices for many obama health care price premiums today. but here is the problem. they jerry picked the data, and they hid a lot of the real costs. we have the real numbers for you just ahead. please stay with us. i was made to work.

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we have some new and conflicting data about health care premiums under obama care. the health and human services department announced nationwide premiums will be 16% lower than initially expected.

but some digging by my next guests showed nationwide premiums will in fact be substantially higher by an average of 99% for young men and 62% for young women. so why the difference in the data? is the hhs bending the truth? here now is the senior fellow at the manhattan institute. let's start there. you have a doubling and hhs has a minus 16%. what is the difference? >> they're saying lower than expected. expected by who? so they're comparing their analysis of the costs of the premiums under obama care to what the congressional budget office predicted rates in 2016 would be six years ago, or six years from 2016 in 2010. >> so they made their estimates in 2010. >> yes. put it this way. let's say there is a car you can buy today for $20,000. cbo says $30,000 next year. hhs says it will cost $29,000 next year. you're still paying $9,000 bucks

more, but they're south baying. it's a thousand dollars less than what cbo said. there. >> are some of these states. i haven't counted every state. i don't know every state there is about 35 states involved in the exchanges one way or another. and they are all different. the numbers are all over the place. and that's the part i found so confusing. why is that? >> yeah. that has a lot to do with insurance, health insurance up to this point has been regulated at the state level. so some states have heavily regulated insurance markets, where the prices are really high as a result. some states have relatively deregulated insurance markets where it's more competitive and the prices are lower. obama care impose as one-size-fits-all regulatory scheme on all states. and that means that the states that are lightly regulated today in general will see huge spikes. and the states that are heavily regulated today like new york state will see some decrease. >> that's an drag point. competition brought prices down before obama care. and would again. all right. i've got this example from "the wall street journal."

a 27-year-old young male is not a smoker, okay. and he lives in nashville, tennessee. all right. now, right now this guy pays minimal insurance plan, costs him $41 a month in nashville, tennessee. >> right. >> if he goes into obama care and takes the low-end bronze package, he jumps from 41 bucks to $114. now, i would regard that as an increase. >> i would too. >> does hhs regard that as an increase? >> hhs does not. they're claiming it does not matter because the cbo projection is what matters. yeah, the average american is going to see that as an increase. $41 a month. that's less than a phone bill. >> bare bones. bare bones insurance. but if he buys obama care, even the cheapest obama care, that's more than a double. >> but bare bones insurance means that if you get hit by a bus, you have a stroke you get cancer, you're covered, which is the rhetoric from the left of all that time is that's what we need to look out for. you can buy that today for $41.

obama care makes it unnecessarily expensive. >> second example. the same -- i don't know if it's the same. but another 27-year-old male, okay, nonsmoker. now, he lives in philadelphia. he is paying now the lowest he can pay. his lowest package in philly, $73 a month. philadelphia, big city. the bronze package from obama care which is its cheapest package puts him up to $195. so he goes from 73 bucks a month to 195. why would someone do that? why would a young person do that? >> that's exactly what i talked about in my forbes column today. we did this analysis for every state where hhs allowed us to do the analysis. and the average is 99%. that's an average. in some states, like north carolina, we're seeing 300% increases. that's a quple. >> this guy in nashville and the other guy in philadelphia, these are more than doubles. >> so this is the thing. obama administration, they're paying -- they're trying to pay

the nfl, they're trying to pay celebrities, they're trying to pitch young men on the insurance product. people are looking at this saying i'm perfectly healthy. i never go to the doctor. you want me to spend several thousand dollars a year on health insurance. no way. >> why would they do it? i want to conclude. young people are likely not to play. >> except for very low income people who benefit from subsidies, yes, that's right. >> and if the young don't play, then obama care is going to have trouble sustaining itself. and the subsidies, who is going to pay for the subsidies. in other words, everybody is betting on this influx of young people. >> yeah. >> what if they don't flux in? there. >> has been a lot of disagreement about obama care, but the one thing where guys like me agree, if these young people don't sign up and spend a lot more on health insurance than they really need, to obama care will not unravel, but it will be a lot more expensive than it was meant to be and it will cover a lot more people than it was meant to. >> who is going to cover that? >> taxpayers. >> really? how much. don't say that.

avik roy, thank you very much. i think i understand it better now. how about good news for a change? the price of gas continues its free fall. 23 straight days down and way down from where gasoline was last year. we going to see sub3 again at the pump some time? we'll get answers on that next on "the kudlow report." please stay with us. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro.

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welcome back to "the kudlow report." i'm jackie deangelis. jcpenney one of the biggest decliners in the market today, down another 15% to just above $10 a share. that's a new 13-year low for the company. it came on very heavy volume of more than 100 million shares. goldman sachs providing the catalyst for this latest sell-off, saying that it expects the company's sales turnaround to be slow and warns of a difficult holiday season, which of course is the most important part of the year for many retailers. back to you, larry. >> all right, thank you very much. now, some good news. the national average gasoline price has dropped 23 days in a row now, and we are 27 cents less per gallon than where we were a year ago today. so what is behind the big drop in gas prices? let's ask an expert. we'll go to cnbc contributor addison armstrong. he is the director of market

research at tradition energy. addison, give me one. what is the most important reason pour the drop-off in gasoline prices? >> quite simply, larry, it's the pullback we've seen in crude. you know, since the -- since the height of the crude rally, up to about $112 a barrel on wti, we've seen 10% of that price come out of the market. and it's been a commensurate run in the wholesale gasoline market as well. >> no bombing in syria have nothing do with it? >> certainly. we built in a very large risk premium for syria on the oil. and once it was apparent it wasn't going to lead to a military confrontation, then that money and that speculative interest came out of the market very quickly. >> you know, i asked that question. sure, i knew the answer. but what is interesting here, oil prices are falling while the dollar is falling. that's very unusual. usually a higher dollar brings oil prices down. oil is a very sensitive commodity. this time it's not working. so are there really deep, strong

fundamental forces that are going to keep oil down such that gasoline prices will go below $3? >> you hit the nail on the head right there, larry. it is the fundamentals that are driving this. you know, on gasoline supplies, we're 5% above the five-year average. we're 10% above where we were this time last year there is lots of gasoline and inventories here. our refineries are running at 90% of capacity, when normally they're running at 82 or 83% this time of year. so there is lots of ability to make gasoline and demand hasn't been that strong. particularly now that we have moved out of the summer driving season and into the fall. >> some of the stuff has to do with the mandated blends, the epa mandated blends, the boutique blends, the ethanol blends. it jacks up the prices. you switch season patiently from summer to fall, to autumn, and those blending costs go down.

so that drops the whole price of gasoline. that part of this story? >> that is part of the story. but i would say on the wholesale level, that's probably been discounted by traders already. so i think that what is going to be the next move down for both crude and gasoline prices is continued weakening of seasonal demand. lots of inventory. you know, certainly we can talk about the high production levels here in the u.s. we're producing more crude than we have in decades. so, you know, there is really no -- no fundamental push for either crude or gasoline prices to move higher through the end of the year. >> it's a tax cut. it's a tax cut for motorists. that's not a small thing. >> it's a tax cut for middle class and working people because after all, we know that when gasoline prices go up, it's the ultimate in regressive taxation. and that is a good thing for the economy. and hopefully some of that money will work its way into consumers' pockets and into holiday spending. >> all right. so i'll just read this real

fast. we've got a bunch of states that are below $3 now, okay. i'll read them. south carolina, mississippi, texas, tennessee, virginia, louisiana, georgia, and oklahoma. they're below 3 bucks. that's a big chunk of the country. it may be a leading indicator. >> it could be. but then you have states like the great state of connecticut where i'm sitting now where we have huge taxes, and we're still paying $3.85 per gallon. >> you know, i got a place in connecticut. i love connecticut. is that the worst-run state in the union now? or it's vying for the worst run. it's vying with illinois and a few others for the worst run state, right? >> it's got its challenges, that's for sure. >> all right. that's a different segment. addison armstrong, thank you ever so much. now, the losing streak continues on wall street. five down days in a row now for the dow and the s&p. but could this actually be a pretty good buying opportunity? are investors overreacting to news owl of capitol hill? and is it time to get a little

more bullish again? we're going to bat that around with our star traders. and i'm going to have something to say about it too. i'm kudlow. please stay with us. [ male announcer ] staying warm and dry has never been our priority. our priority is, was and always will be serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. [ woman ] we are the united states postal service. [ man ] we are the united states postal service. [ male announcer ] and our priority is you. go to usps.com® and try it today.

welcome back to "the kudlow report." i'm jackie deangelis. it was the 50 straight session of losses for the dow. it's been down more than 400 points over that time span. walmart was a big catalyst for the losses today. a report said walmart was cutting orders because of big inventories. the company calling the report

misleading, but the stock and the dow still falling. traders saying the big reason for the sell-off is the uncertainty coming out of washington. >> that's what they always say. that's what they always say. but many thanks to jackie deangelis. now. let me give you a quick take on this whole market situation. first, i think we're going to have easy money as far as the eye can see. in fact, there will be no more fed tightening probably during my entire lifetime. we're going to have the queen of doves coming in to run the fed. now, add to that, i know it's a tepid economy. it going to be a 2% economy. that's all. and that can generate about 5% profits, maybe a little more. but therefore i see a good opportunity to buy this dip and stay with stocks, because the bull market is not over. all right? i'm saying easy money, tepid economy. that's been the story for 4 1/2 years. and profits will continue to rise, albeit more slowly. now, my last point, please, try

to put washington melodramas out of your head and just focus on profits and fed. those are the fundamentals. that's my message. it's not a perfect story, but i think it's a bullish story. so let's talk. bring in jim iuorio, director of tj institutional services and larry glazer of mayflower advisers. jim iuorio, i think it's particularly important to ignore washington, all right? because there isn't going to be any big budget shutdown. maybe a day or two max. there isn't going to be a debt default of america's interest expenses. all those melodramas are not going to happen. and maybe most importantly, there aren't going to be any additional tax hikes. so i say put washington aside and just focus on the fundamentals of the economy and the fed. >> up to this point, i don't think the markets paid that much heed to washington. today, when i saw a $20 rise in the gold market, i thought maybe that was the first time the

markets were actually taking it seriously too. and longer term, i definitely think i'm a bull. but i think there could be another 40 handles lower in the s&p based on a couple of things. the reason we rallied prior to the last week of trading was what the taper was pushed back and we got the queen of the doves, stolen from my friend larry kudlow. we got that she is going to be the next fed. if we start to get hotter data than, that then all of the sudden we'll be talking about the taper again, and that becomes a negative. i know a lot of people cringe when you say good news is bad news and bad news is good news. but it still exists. >> durable goods, which is essentially business investment, core business investment, down 3% orders, 4% shipments for the last three months. >> the philly fed number was good. and that cap expending on that number was zeefndecent.

>> i was trying to be the positive guy. that's normally you. i thought you would go right with me on that. >> i am. you know what this is? it's not goldilocks. if it is, it's kind of a shrunken version of goldilocks. >> amen to that. >> larry glazer, in the good old days, in the '80s and '90s, we'd have like 4% growth with 2% inflation. >> sure. >> now we have this midget, this mini goldilocks, which is 2% growth. and i don't know, 1 1/2% inflation. but as long as the fed stands behind the market, which i think it will for the rest of my days. >> sure. >> the market is shown us for the last four or five years it can rise on that. >> that's right. look, we have that indefinite easing put that we moved on from helicopter ben bernanke to parachute janet yellin. she is going to parachute in buckets of money. >> she is the queen -- put it back. >> the queen of the doves. >> put that back on the full

screen. she is the queen of the doves. and i they with the greatest respect. she is a brilliant woman. >> absolutely. >> but she is the queen of the doves. go ahead, larry. i'm sorry. >> look, this is the not that bad economy, right? and in a not that bad economy is actually pretty good for stocks. it means you have low inflation. it means you don't have incomes rising. so it's bad for the middle class, bad for retail that we see for walmart, but it's okay for corporate profits because their costs are not rising. so it's actually not a bad stock market for investors. but we have priced a lot of good news in. what is interesting here as we talk about the threat of a shutdown that is buller in 95, 96 precedent, you saw that was bullish. but it's also interesting because the fed is increasingly tieing that policy to what happens in washington. that's new. and when we see the fed is in there as the back stop, the worst things get this washington, the more the fed is going to be there to bail us out. so you know as an investor, that's going to be bullish at least for the near term. they're going to get us through this hurdle. they're not going to taper when

everyone hates each other in washington. thinking washington story -- >> so that's a positive. so we sleep a little better. >> it's great fun to report the washington story. and there is a lot of what i call low drama in the washington story. but i don't see anything big happening. jim iuorio, long-term interest rates coming down, stocks going down. what's going on here? >> well, i think that long-term interest rates are going down. not just because the taper talk, but also because when we lost 400 points in the dow, all of the sudden people started to worry about with a they're going to get their money. we're not going to sell off long-end treasuries if the stocks appear unstable. i know we have gotten very little follow-through on this down move yet. i think we. i do think there is some weakness come manage the weeks ahead. i think ten-year rates could go to 250 based on that. i think the market does think there is a taper coming eventually. probably not october. i think there is a taper of three criterion met. if the numbers get better, significantly better, if washington all of the sudden they shake hands and decide -- well, that's actually ridiculous to say.

but if the markets don't destabilize. if those three things are met, why would he have brought it up in may if he didn't want to taper? >> oh, because he changed his mind. he changed his mind. the numbers didn't come in that great. the employment numbers are not coming in that great. the whole problem with this expansion is that businesses are not making long-lived investments. they're not building factories. >> expansion, expansion of his balance sheet. >> that's all he knows. because businesses are not making long-term investments, they're not hiring the way they should. and that's what distinguishes this particular business psych federal others. and that won't change until there is less uncertainty. but my point is a simple point. it may be a slog, all right. you're not going to have the kind of movements you had in the first two years of this rally. but i think you do slog higher. that's my point. you slog higher in stocks. and i think investors should not outguess the short-run, should not outguess washington. just be long. investors should be long.

all right? i really believe that. buy the indexes and hang on to them for a while. >> i don't disagree with you as well. i was thinking we have a little room to correct and might get better prices. >> i got to go. >> larry, from your mouth to god's ears, i hope you're right. >> that's it for tonight's show. i'm larry kudlow. i'm just saying, washington's very important, but it's not going to do anything to the stock market. thanks for watching. we will see you tomorrow night. i know what you're thinking...

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