the picture to a large degree and you can actually physical out what j.p. morgan can be worth. i got to tell you, it's worth a lot more than it's selling. there is always a bull market somewhere. right here on ""mad money."" i'm jim cramer. i will see you tomorrow! welcome to "the kudlow report." we are live at 7:00 p.m. eastern, 4:00 p.m. pacific. president obama may be caught in another lie on obama care and scott walker is about to join me to talk about it. but first up, we have breaking news. in what sounds like a valedictory speech. bernanke making comments about qe 3 right now. we have an advance copy of the speech and he's all over it. >> yeah, he's going out on a dovish note, larry. the fed chairman saying that he -- the fed has committed to accommodate a policy for as long as needed.

and the funds rate is likely to remain at zero for a considerable time. he talks about the funds rate. he also said that the fed should not -- make sure that the labor market is sufficiently strong before the fed were to hike rates. and in addition, he says the funds rate can remain near zero well after the unemployment rate hits that 6.5% threshold which he says is a threshold not a trigger for raising rates. if the data supports the forecast, the fed will moderate quantitative easing but the asset purchases are not on a preset course. he talks about transparency and he said this is one of the big things he has done during his tenure. and made a big change in that. that's helped the policy he believes. >> don't you think he's screwed up the forward guidance in the last go around? everyone expected a tapering down of the bond purchases?

>> i agree with you. are we talking about this now or later? >> let's do it now. i don't get to visit with you enough and i love you and i want to visit with you. >> i'm giving him a lower grade because of what happened in june and september. i agree with you complete he. i thinks he done a lot of bold stuff and i think what's done a lot of enkninnovative things bu grade is a "b." there's my "b." because the june and the september messups, i don't think he's go at this communication thing right. i applaud what he's done on transparency. i think the quantitative easing given what happened on the fiscal side had to continue. but i think at the end of the day, he needed to do better on the communications to get it right. >> very amusing. i give him a "b." >> drum roll? >> a little different reasoning but we come out the same. i thought he was fantastic during the crisis of 2008. i thought his emergency lending was fantastic. i think his first q-1 was exactly right on target.

the system was desperate for liquidity and he saved us. unfortunately, i never liked q-2 or q-3, the reason is it didn't boost the money supply, didn't circulate through the money to create loans because of the 25 basis points he's giving. that's $2.3 trillion in excess reserves. to me that was a waste. on the other hand, the good news, my commodity indicators, dollar, gold, crashed. commodity prices -- >> no inflation anywhere. >> no inflation anywhere. and i give him credit for that. >> he saw through that. >> the whole republican party ran against him on inflation. and they were completely wrong. >> we went into the whole thing thinking if you boosted the money supply like that, you were going to get tons of inflation. it's changed our thinking. what the m-aggregates was we can only say on this show, it's a difference -- >> there's a difference between the balance sheet and

m-aggregates. what you put on the balance sheet doesn't necessarily circulate anywhere. >> doesn't cause inflation. >> i think the 25 basis points had a lot to do with it. >> i think the fed did what it could do. i'm not saying it was the most effective thing. but the fed can only raise asset prices and lower interest rates. and it did what it could. in an environment where not much else was being done by the fiscal side. >> i would say enough is enough. q-3, unless -- i don't know. we'll disagree about the 25 basis points and might push some money out. we'll see. one other thing i don't like. i think he engaged in credit policy, buying up mortgages, buying up car loans and the like. i think that's -- >> you mean early on? >> early on. >> i would agree with that. >> they're still purchasing mortgages. those subsidies should be determined by congress and the taxpayers. i think it goes beyond the fed's

purview. >> let's talk about a higher power. how is it possible when we appeared to meet a guy who was an expert on the great depression, the recession, he did all of the things that he thought were needed to be done at that time in the sense that we needed to boost the housing market and stop a crash in home credit. in auto credit. in the entire panoply of credits. he did back away from those as soon as he could. he closed down the programs instead of for bond purchases and he's ended up giving $350 billion back to the treasury. >> i think he was heroic. i love your use of the term higher power. that's why i give him a "b." i would have given him a lower number, but "b" was good. he was heroic. quit while they're ahead. i don't like your report, low rates as far as the eye can see. the idea that they're going to keep buying bonds. if they don't make some change to get that money circulating through the economy -- >> how does the fed do that?

how do they create circulation? >> i think the fed can't control circulation. >> can't. >> but i think they could take away the 25 basis points, free money. take it away from the banks and on the fiscal side the u.s. government should have pro growth tax reform and regulatory reform. something we'll talk about later in the show. now, what about this story, we'll close down, thank you for your help tonight. faking the last -- faking -- wait. we have got wisconsin governor scott walker. he is standing right here. he is about to join us. we'll talk politics and unions and pensions and much more. all right. i forgot he was standing in front of me. faking the last job's report to elect barack obama. do you buy into that? >> i don't. it's a serious allegation in there. we have not been able to prove those allegations. in fact, the one guy who's named in the story is not exactly said in "the new york post" story, but he left the census in august

of 2011. so the story is based on unnamed -- >> that's new news. >> now, it doesn't exactly say he was the guy. >> right. >> but it doesn't say he was n' the guy. he was gone from that point in time. >> this data filling -- i'm not sure what they that means. this thing has gone back to 2011. this wasn't just germane to september of -- >> i'm sure there are instances where data was fabricated. there are 7,000 data gatherers at the census bureau that -- in six locations for over a hundred surveys. be they tell me they have a monitoring system in place and they go back and check these things. >> hence revisions. >> right. there was definitely a pop in the data ahead of the election. there is no evidence to this point, i assume pending an investigation, no evidence that it was bumped up before the election. by the way, the numbers have stayed down, payroll growth,

there are other confirming factors to the data that was -- >> a lot of this is a participation rate. >> there's that square right there. you notice it's kept going. it's kept coming down. >> look, i defended the bos on this. i will apologize if the evidence comes out that some finagling was done for the september report which was reported in october, yes on the eve of the election. so far, i don't -- >> it's a very serious charge. there's an allegation out there, we are very far from perfect. >> that's why i say so far nothing. steve liesman, i can't believe we both gave bernanke a "b." >> more of a meeting of the minds -- >> you have accused me of watching the data in the past. >> okay. >> now time for the main event of "the kudlow report" tonight. we have scott walker about to join us to talk about obama

care, budgets, and will he be a presidential candidate in 2016? as always, don't forget free market capitalism is the best path to prosperity. scott walker knows that's true, that's why we love him. "the kudlow report" is coming right back.

i was not informed directly that the website would not be working. as the way it was supposed to. had i been informed i wouldn't be saying boy, this will be great. >> say it ain't so, mr. president. turns out this might go down as yet another obama care falsehood. i'm being very polite about that, because of my respect for the office. we learned today that the white house was in fact clearly warned way back in march by the respected consulting firm mckenzie & company that the healthcare.gov website was full of risks and disasters and today, jay carney was forced to walk back the president's i didn't know. take a look at carney. >> the president was briefed regularly on aspects of implementing the aca and including the recommendations from this review. the president as we said repeatedly got regular briefings

and was told there would be -- that there were problems that were being addressed and that upon launch as i have said and i can point you to transcripts there would be glitches and problems. >> so it's no wonder the president's disapproval rating now stands at 55% according to "the washington post." it's the worst of his presidency. so, will obama care be the defining issue for republicans in both 2014 and 2016 elections? we're honored to be joined by wisconsin's governor scott walker. he is out with a new book "un "unintimidat "unintimidated." i want to talk about everything, but let me just start, the polls are crashing. and obama is caught in essentially his third falsehood on this subject. what's your take on this? >> well, i think that's part of the problem is if you have someone who didn't have executive experience and they let the political shop in the white house run everything. political shops as you know and i know, they have a major impact

on policy but they're not the sole force of policy here. i think that's part of the problem. they made a promise that nobody could deliver on. not just in terms of the web side but the overall policy of obama care which is an abysmal failure. it's not only a failure for obama care, but continuing to be a wet blanket on the recovery in the nation's economy. >> right. anti-growth. but it sort of blows my mind, okay, this guy is a lawyer. i have never had any personal criticism of him. i don't deal in that currency. but my point is he's a well trained lawyer who taught law. he's making the assertions that are blatantly false. does he not think in the able of facebook and electronics this isn't going to come out? >> it's shocking. >> i think -- i think people are just as angry at his falsehoods as they are at the breakdown of obama care. i really do. >> i think it only gets worst, day by day goes by and more of the promises we find out, it's

one thing they're wrong and you're told they're wrong and you actually believe that people believe that. but the more we find out that there were business -- as you said, firm after firm telling the white house and the administration it wasn't going to work, it's either one of the things where they're not listening to the facts or they're not being informed. in either case it's rather troubling. >> no ceo experience whosoever. so you believe, "a" obama care should be the defining issue in midterm elections? >> no doubt about it. political issues are most significant when you're telling people something they know to be true. i think regardless of how people originally thought about obama care, overwhelmingly the public realizes this is an abysmal failure. not just the rollout, but the policy itself. i think the longer this goes on, the more democrats are going to run for the hills. >> as a governor running for re-election, your third re-election, how do you put obama care into the conversation? how do you work it in? >> well, in our case it's interesting. the only democrat in the race is trying to make an issue, trying

to talk about how they would have taken the expansion, they would have taken the state-run exchanges. i think that might have sounded nice a couple months ago, but as time goes on, i think for those of us who raised question marks about obama care it becomes pretty clear we didn't want to put our state taxpayers at risk. having asaid that, for republicans in state and federal offices as well, we have to be careful that we don't look like we're relishing this. as much as us raised the red flag of concern, i think we need to empathize with many of our fellow citizens who are going to suffer because of these failures. and try and find solutions not just be the ones pushing it over the cliff. >> you have argued strongly in the 2016 presidential race that it ought to be an outsider from washington and it ought to be a governor with executive experience. tell me more. >> who's the ideal candidate, to me it's a former or a current governor. both a governor on the ticksette

for president and vice president. it's unconventional, but so is bill clinton and al gore and this pushed the whole next generation movement. that was key to the '92 election. in this case, when you're going to clearly -- republicans are going to run against the institutional washington insider, that being hillary clinton who's not just been a secretary of state and a u.s. senator, first lady, she has been around washington for a long time. >> she also campaigned for the single payer -- >> well, obama care is really hillary care. >> you're ruling out paul ryan -- >> to me, i think paul ryan is one of the few exceptions in congress who really steps up and has that reform agenda that we most often see from governors that we don't see enough of in washington. but i really feel overall there has to be an anti-washington sentiment out there amongst both republicans and democrats and the more you can capitalize on that by sending people up,

they're going to come in from outside of washington, those are the people we we'll turn to. >> if you win this november you'll run for president, are you not? >> no, i'm focused on being governmen governor. there's still at love thing -- a lot of things that need my attention. i get to spend a lot of time focused on the needs of my people. >> let's look at someone, like chris christie gave a talk, "wall street journal" ceo conference, and he says, you know, quite bluntly, the gop has got to reach out, women, blacks, hispanics. he did, he was successful in a blue state in new jersey. is that a model you subscribe to? >> yeah. there's 750,000 more registered democrats in new jersey than republicans. i think that's a great story and for all the media that tried to down play there, there may be an exception here and over, but all overall he's a solid reformer. >> do you think he's your biggest opponent? >> i think in the end, i think there are 29 other republican

governors who could do just an exceptional job being the top executive in this country. because as i write in the book, time and time again, the reason to be optimistic if you're a republican, if you're a right of center voter even after last years presidential election because in the states there are 30 republican governor, almost as many republican majorities. we're doing the real reforms, we're optimistic. we're showing the courage -- >> i'm going to come back to the reforms. i want to ask you about the difference between ronald reagan, mitt romney and yourself and the miracle you did in wisconsin. taking on the unions and beating them at their own gauge. governor walker took on the public unions. it was an epic battle in order to save the taxpayers. and guess what his recall victory was even big theirton original win for governor. we'll look at the economic results and talk some more national reports. please stay with us. the american dream is of a better future,

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but her knee pain returns... that's two more pills. the evening's event brings laughter, joy, and more pain when jamie says... what's that, like six pills today? yeah. i could take two aleve for all day relief. really? and... and that's it. [ male announcer ] this is kathleen... for my arthritis pain, i now choose aleve. ♪ [ male announcer ] look for the easy open red arthritis cap. welcome back to "the kudlow report." president obama is hopeful there won't be another government shut down come january. speaking at a "wall street journal" conference, the president says he thinks the republicans realize shutting down the government was not a good strategy. the president also said the american economy is poised for a breakout that's being held back by washington politics. a novel thought indeed, larry. back to you. >> many thanks. kayla thatshy.

we appreciate it. governor, i want to talk about your epic battles with the unions. but a quick take on what obama is saying. a quick take. he has this sort of nasty thing that he does against the republicans. but do you think the gop was wrong for this shut down? >> i think it was good to put attention obama care, but i thought the government was too big, too expansive and too involved in our lives, but it needs to work. we should show we can make it work and we have a viable alternative to it. >> you would repeal obama care? >> hands down. i would take a postponement to get it rolling. i would take a postponement to get things on to the next election. >> you were tenacious and determined in your battle against the public unions. you asked them to pony up more money for the health and the -- >> still what -- >> you roll back the collective bargaining. what's the net effect on the wisconsin economy? >> you think of four years ago

when i ran, the unemployment rate was 9.2% and today it's 6.4%. we ranked in the bottom ten in the best and the worst states, and today, we're up to number 17. four years ago most importantly, the survey by our statewide chamber of our employees showed 4% thought we were headed in the right direction. today it's more than 94%. so my governor, my previous governor's last term, a democrat, he lost 133,000 jobs. we are gaining jobs. >> being tough pays off. >> we took a $3.6 billion budget deficit and turned it into a $760 million surplus. lower taxes. more investments in our schools and more worker training because we made tough decisions. >> but in the book, you blast the unions as corrupt and protection racket. now, you took them off the hook. people no longer have compulsory dues. >> that's right. >> are the union rolls shrinking? >> they plunged just like mitch

daniel did it. it is about being pro worker and protaxpayer but a now they get to choose. if they want to be in the union that's great. if they don't, for a teacher in milwaukee who otherwise would be stuck paying $1,400 she gets to choose to spend that on her kid's college education. that's a lot better than it was before. >> in the book again, i read a lot of the book. >> hopefully people will read it. it's a good thing for christmas. >> it's a very good read. you're tough on mitt romney. and you pose some contrasts with ig aen. you say reagan did not dismiss 47% of the country as a bunch of moochers. you say reagan wouldn't have said i'm not concerned about the very poor and ronald reagan wouldn't have uttered the words self-deportation. as a reagan alumnus, i agree with you on all counts. tell me why you singled that out. you knocked mitt down pretty good, but you're holding up

reagan. in your political philosophy and vision, tell me why you wanted to make -- >> well, first of all, mitt romney is a great man and would have been a great president, but got poor advice in this campaign. it had to be all about barack obama. the misnomer of the campaign, they looked at this closing argument in the last debate where ronald reagan said are you better off today than four years ago? what president reagan said and i researched his nomination address back in detroit in 1980, and found some really aspirat n aspirational words, if you're in despare we want to help you and give you real hope. but it's not hope through the mighty hand of the government. but about empowering people that comes from work to control their own life and destiny. we should be talking about it, not providing a safety net, but lifting people out of poverty. >> opportunity. social -- >> people don't want to live in poverty. >> it's a jack kemp message. >> absolutely. they want to be living in the american people. >> mitt was too pessimistic.

in some sense, obama was the optimist in that campaign and mitt -- >> he was falsely optimistic because he didn't have a plan -- because his optimism was based on the mighty hand of the government. ours should be based on the people. not the government. >> last question. in washington i'm still putting you in washington after you're going to win your november election which i predict. what would you do? first thing, what would you do? you see the mess down there. you see the problems with the budget, with taxes. with obama care. first order of business for a president elect scott walker. >> any person who's in the right mind should repeal obama care, replace wit a market-driven solution. cut the marginal tax rate and rein in the epa and the national labor relations board. >> your friend paul ryan wants to reform enhitment wititlement. he said the gop should spend time worrying about how to help poor and poverty stricken people. this was a jack kemp message.

this too was a reagan message. would you go down that route? >> he's absolutely right. i write a chapter about it. you haven't gotten to it yet, but you should read it. middle of the road center voters don't want us to move back and forth on issues. they want us to see we're compassionate about all people. >> solutions. >> conservatives need to show that we are indeed compassion e compassionate. to show we are compassionate. compassion is by empowering people to control their into lives and destinies. >> governor walker, terrific stuff. the book "unintimidated." it's available everywhere. i've read chunks of it. it's a great read. going back to obama care. it sure looks like the president has been caught in another misleading statement. don't forget his ugly new poll numbers. it is all coming back with you, the implications of the obama

crash and burn. i'm larry kudlow. please stay with us. ther

welcome back to "the kudlow report." once again, our top story on the obama care front looks like another lie. he and his top aides were in fact warned that the

healthcare.gov website would have serious problems an yet he said repeatedly and again days ago that he didn't know. look at these two pieces of tape and please, you be the judge. >> the president was briefed regularly on aspects of implementing the aca including the recommendations from this review. >> so i was not informed directly that the website would not be working. as the way it was supposed to. >> you just can't have it both ways. you just can't have it both ways as we discussed with governor walker. anyway, the question is how bad and big is this obama mess getting? let's look again at the latest washington/abc news poll. 63% of americans now disapprove of president obama's handling of obama care. but maybe more important, 57% oppose the entire plan. and his approval rating has plunged to 42%. and frankly, i think it's his

repeated falsehoods. i think they're infuriating americans and sinking his creditability. we'll look at a potential bailout. here is mark levine and we welcome back the former omb associate director. jim, i know you're not a psychologist or psychiatrist or anything like that, but i have to believe that these -- i call them falsehoods out of respect for the out of of the presidency. there's another shorter word that we could use. the constant unveiling of these falsehoods is just killing him. he's going to need help when changes are coming. what's your take on this? have you seen anything like it? >> no, i have not. i worked at the omb and under president george w. bush. as others have written, we had a huge apparatus in place to make sure that the president never said anything close to being not true. the staff lets the president and this administration, they have let him say some things that are

really questionable at this point. really important to realize that they said they didn't know about these problems coming down with the website. i wasn't on the inside of government, and many people weren't on the inside, and we knew there were problems. i think they purposely denied there would be problems because they never wanted to move that october 1 launch date. they wanted to launch the program no matter what was going on, no matter how bad it would be, because they thought it would be no turning back. now we're seeing the results of that. >> that's a good point. what harm would it have been done to realize that the testing hadn't been done for the website and a lot of the connectors hadn't been done for the website. what harm to push back the start date and you have a democratic revolt going on in the house and especially the senate. they want to push back some of the enrollment dates. i don't see what's wrong with that. why does obama and his people keep resisting what is obviously going to happen?

>> well, first of all, larry, i think people should be clear about what the mckin zi report and it's described. they didn't do any technical analysis, they didn't look at code. they made a lot of recommendatio recommendations. they made predictions. some were right, some were wrong. for example, they predicted there would be long waiting times when people called. that's not true. the data hubs would be overwhelmed. that turned out not to be true. they made some good recommendations and some were for example, that president should have put one person in charge of the entire rollout. >> right. >> that was a good recommendation he should have taken. not like they said that the whole website was going to fail. >> but they said the timing was all wrong. i'm going to say they did fail. they said this is in late march, okay, and they said, management indecision and a lack of transparency and alignment on critical issues were threatening progress despite the tight effort. they said the contractors were not coordinating.

and as you noted they said there was no overall quarterback. look -- >> those are fair criticisms. >> but that doesn't -- >> not answering my question. but my point is why couldn't obama just acknowledge that and buy himself some time? and here's the key point. right now, you've got smart guys like jim caprettaa saying here's what we should do. why is obama so stubborn, not even pushing back the deadlines that might help the cancellation recoveries on the insurance plans. help people from paying the taxes. why won't he heed the spokes people in his own party? >> i think he has acknowledged the problems. he said no more one was more mad at the bad rollout at the website than he was. i'm sure that's true. but in terms of deadlines, there are long deadlines out there. people have until march 2014 to

sign up for the insurance. if the website still has problems in march he'd consider extending it that time. >> everybody -- >> i signed on october 22 and i had no problem at all. >> look, jeanne shaheen, you have a dozen democrats that disagree with you. you can give the talking points, mark levine, but you have a whole bunch of people who want a common sense solution. senator rubio, the bailout. there's an argument, jim, you can help us through this. the premiums -- first of all, the volume of sign-ups of enrollment is going to be smaller than they think. the premiums are not going to come in, but the insurance claims maybe from the sick and the elderly are going to come in. there's going to be a deficit and the government is going to have to bail them out. john boehner today said no way. of course senator rubio said that in the "wall street

journal." what is your take? is this going to go under before it gets out? >> well, they put a letter through the medicare and the medicaid services hinting they were going to juice up the bailout provision that was already enacted in the law to help the insurers if they suffered from adverse selection twha.'s . what's going on here? the president said keep your people on the old plans in 2014. that means the people going into the exchanges will be likely to get a lot more claims. the result will be a lot higher payouts and premiums and the insurers will lose a lot of money. the result will be that the government will end up having to cover those costs with the risk corridor provision they wrote into the law. >> the risk corridor is what really interests me. do they have to go to congress to get those extra funds, jim? >> no. that's already been built into the health care law. but they are hinting that the regulations that are

implementing it will be juiced up to give even more money to the insurers. look for that in the coming days. >> i think all hell will break loose if that goes through. nobody wants to spend any more on this stuff. i don't know the way this is going it may be dead before it even starts. >> there's some good news, larry. read the front page of "the l.a. times" today. turns out more people signed up in california in the first two weeks of november, twice as many as in the entire month of october. >> california -- >> they're going to meet their 2014 targets. >> unfortunately -- >> you're trying to help the president succeed and the people are doing very well. that's true, the republican governor -- >> i think you have a problem with more uninsured. we'll see how that cancellation goes. i can't forecast that, but what i can forecast is the congress will cause a big stink if obama's people come to them for more money on this obama care.

that i can assure you, mark levine. thank you very much. and i appreciate it. now, be still, my supply-side heart. will we really see in just a few days an actual corporate tax reform plan come out of democratic senator max baucus? he's the head of the finance committee. is it going to be any good? we'll get a bripreview coming u. (vo) you are a business pro.

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hurry, this offer ends december 2nd. for details, visit vwdealer.com today there's a big corporate tax reform coming. you know, in my view a big bancorp rat tax reform would be the single most significant pro growth measure, should have been done years ago, including bringing corporate profits back from overseas. let's talk to jim from the american enterprise institute. what you know about it, is it going to be any good? >> well, when you look at all the parts, it looks like a scheme to get $200 billion to pay for infrastructure spending. i mean, the top rates are going to go from 35 maybe to 30, maybe a touch lower. still not the 25% of the oecd average. the repatriatation, it will basically -- they'll tax that

money come hell or high water at 20% that's where the $200 billion sebasti $200 billion is going to come from over eight years. you have to pay probably between 60 and 80% of what the final rate is and then if that rate is lower than what the -- your foreign jurisdictions you don't have to pay anything. if you're in ireland, 12%, they have to pay another 12 points above that. it's not really this wonderful big bang reform that you're talking about. >> got the punitive elements in it. okay. 30% top rate. that is too high. did you say 20% on the repatriation of overseas profits? i have heard ceos say that 10 or 15 is the highest they'll go. years ago when we did this, in the 2000s, it was 5% or 5.5%. why don't we think the money will come home at a 20% rate? >> listen, that's what dave camp

is suggesting, i think 5.5%, but the thing is, they're not going to have a choice. i mean, they can do what they want with the money, but the obama administration, they're being to get their $200 billion over eight years. when you look at it, what -- because, listen, they don't think that the money coming back won't help the money. it will just go into the stock buy backs and dividends. >> what's wrong with that? >> i think that would be great. they don't. >> people get stock buy back, they get cash dividends, that cash doesn't evaporate. they might invest it. create a job some place. >> that goes to the 1%, larry. they don't care about that. >> oh, i see. not the pension funds and the middle income union people who get the benefits. can i ask you though, i'm going to be single minded. why do we have to have a corporate tax at all? i mean, corporations don't really pay taxes. we pay the taxes. they just pass it through. they collect it and pass it through. why do we have to double tax capital gains and dividends?

which are already taxed once as corporate taxes. i mean, capital formation is our most valuable economic tool. >> i'll tell you the corporate income tax is so terrible. baucus and a lot of democrats they want to be revenue neutral. you can knock it down to 25%. i don't think -- listen, i think it would pay for itself. i think this is one time where a big tax cut would absolutely pay for itself. it's a horrible tax. they should get rid of it. if you tax capital, tack at the individual -- tax at the individual level. you're right. >> i don't understand. what are the political legislative outlook for this? baucus, has he ever gotten the support of harry reid and the leadership over there? >> listen, the president has the plan. baucus came up with this. we have dave camp, the republicans they are like obama care right now, morning, noon and night. they have one issue. you know, the reform keeps getting pushed back. i'll see what dave camp if he ever more elms are coming.

it seems like a lot of work not to have a 25% rate. >> that repatriation rate has to be lower. thank you very much. now the markets went sideways today. i guess they're waiting on ben bernanke's reports tonight and there's more fed news with the last minutes of the fomc. we'll talk about it with our expert investors coming up. it means trying something new. [ woman ] just, that uncertainty of what's to come. [ man ] just kidding. ♪ can you please stop doing that? ♪ [ woman ] you walk outside in brooklyn, and it's cement and broken glass. and this is just like... the opposite of that. ♪

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welcome back to "the kudlow report." stocks finished lower on the day, the dow closed down 9, just shy of 16,000. the s&p 500 lost four marking the first back-to-back losses for the month. and the nasdaq dropped 18. shares of home depot rose as the retailer posted better than expected profits and sales and it boosted guidance. the company cited the improving housing market. shares of best buy took a drive after they expressed concerns about profit margins heading into the holiday season. the company says its competitors are spending heavily on holiday promotions this year and it has to do the same. that's the latest. >> i was told that home depot actually raised their guidance for the future. so it's pretty bullish story for the economy. >> i don't think anyone believes that the housing market is going in the other direction. so lowe's, home depot, expected

to benefit more from more. >> thank you. let's go straight to the investors. michael, a qwiki uick one on th what is the outlook out -- improved outlook, what does that tell you about the economy and the market? >> well, it tells you that housing or the home improvement sector is doing really well and rates are low enough that people are engaging. it looks good, by it could change on a dime like last summer. positive news. >> and steve liesman reported that bernanke's speech, maybe a valedictory speech, maybe not. it was dovish. it didn't talking about raising the fed funds rate. now, that has to be a bullish thing for tomorrow's open

because janet yellen will be in the same camp. he gives yellen a shout-out. what's your comments on this? >> they were comments on yellen that were wildly dovish also. they seem to be having less of a positive impact as they had in the past. the market's becoming used to it. which sets up a situation, when and if they do disappoint which i don't think is happening any time soon, the market can seize a sell-off. the market is still headed higher. it's giving me no reason to doubt the rally. and i might start to doubt it a bit, but i think we're headed higher. >> i think there's a fair argument if qe 3 has helped the middle class, the main street, but i think that helped the stock market. no two ways about it. let me ask you the bubble question. do you believe this is a bubble or sustainable? >> well, where i'm looking at stocks right now i'm looking a

at p.e. of 15 or 16 based on in -- next year's earnings. i would say that's not a bubble, but fair value. but i think the thing is, you know, corporate earnings have held up just enough over the last several years. we are at the top of the cycle. i expect the growth and earnings to go down. but they kept the foundation under stock prices no question that the market is up well above economic growth and there's a monetary premium in the market at some level. but i don't believe it's bubble territory yet. i think it's investors reacting to the monetary policy. >> to clarify too, every publication i pick up starts to talk about the bubble. the hysteria draws everyone in and when we don't consider it anymore, that's the time we have to worry about a bubble. i don't think it's a bubble until everyone is leathered up

and they start talking about sweeping up the loose money and putting it in the stock market. we could have a correction, but i think the bubble talk is ridiculous. >> the indexes have come down, the price of gold has come down. i look at those areas. one area i have read about, i don't want to get too technical, but the leveraged loan market and collateralized loan and there may be an absence, an absence of cash backing for those. and if there's a bubble that might be where it is. but i think that's a very small audience. so let me go back to mike. in this environment where you acknowledge that it's not a bubble and that it's real, where do you go, where do you go to invest? >> i think you find companies trading below a market multiple. i would look in the energy area. indlook -- i would look in natural resources. those are areas that not participated to the same level of the broader market.

i would look at technology as well. medical devices and u.s. manufacturing on global growth. so there are opportunities, but it's going to be a little bit more difficult because we are in the fifth year of a bull market. we haven't had a real serious correction since march of '09. we're headed into year five here so there's more risk in the stock market. investors should be careful to have an exit strategy, to hedge their risk. i think you can sort -- the buzz word of the week is melt up. i still see given monetary policy here that's likely to continue for a while. >> i had an interesting dinner last night with sophisticated people. one guy pointed out that all over the world the central banks are easing. they're adding money. the interest rates are low. whether that's working for the economy is a separate question. i think there's a good debate to be had there. but in terms of the financial system it is overflowing with liquidity from virtually every major central bank in the world and there looks to be no end to

it, jim. do you spread your wings, do you diversify or is it enough to stay in the u.s. stocks? >> it's the whole tallest midget thing. i mean the things don't look great, but the u.s. stock market looks better relative to everything else and there's so much hot money coming in like you said that it ends up there. i mean, europe, china, us. everybody seems to be -- japan i meant. everyone is pumping liquidity in. gold has plummeted because we've the laggard in currency war, despite the fact that we have the queen of the doves -- >> i don't mean to interrupt but i love the fact that the stock market is going up and gold is going down. because it doesn't indicate inflation. it indicates a better economy. because in a good economy, you don't want gold, right? in a gold economy you want to make investment. so the empress of the doves she's inheriting a good position from bernanke on the inflation front.

i have to get out. you guys are both great. thank you. that's it -- >> let's have another talk on inflation, larry. >> i know. inflation is coming. tonight's show, that's it. appreciate governor scott walker coming on. he'll be a leading presidential candidate. i'm larry kudlow. we'll be back tomorrow night.

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