a princess dress? yes how about some cupcakes? yes lollipop? yes! do you want an etch a sketch? yes! do you want 50% more cash? no you got talent. [ male announcer ] the capital one cash rewards card. with a 50% annual cash bonus it's the card for people who like more cash. what's in your wallet? i usually say that. show. >> she's going to sing t-shirt for us. >> more cow bell please, (laughter) . >> brenda: it's a new battle royale over the economy, not between president obama and governor romney, between the markets and business, and stocks jumping, pointing it a recovery. major companies, fed ex, intel, warning they don't see things improving. which should you be listening to. that answer could decide who wins the election. hi, i'm brenda buttner, this is bulls and bears and let's get right to it. the bulls and bears this week, terry b smith, tobin smith.

and jonas max ferris, and who is right about it, the markets or big businesses? >> well, big business is right about the economy. you can believe them or not. they have no incentive to tell you things are bad. doesn't help the stock prices, what's really happening if you look at data points, the economy is loge down. new orders going down. trading partners going down. manufacturing going down and employment-- here is the rub, the change, bad economic news means good things for the the stock market. the stock market is not saying that the economy is recovering. the stock market is saying we're going to get more stimulus from gentle ben, more stimulus from mario draghi. not an expectation of recovery. >> those are the central bankers printing money and putting it into the economy in the hope of making the recovery pick up. but, toby, i worry about

looking at individual businesses, because, individual things drive them and it may not be a good read on the entire economy. >> if you worry correctly, because if you look at for instance, intel. lighter numbers, why? because they're getting their butts kicked by tablets not an economic indicator. look at real economic indicators, my favorite is con tearer board, jim. you look at container board, and put stuff in bigger stuff and ship stuff. >> brenda: that's a technical term. >> auto production is up, oil production is up, job market is not up, but that's nothing to do with this rip roaring, or not economy, it has to do with the fact that over 6 million jobs available in the united states that can't be filled because people aren't trained. the labor doesn't require-- meet the requirements. we are, our economy is slowly getting better and it's slowly getting better because housing is now getting better and that's a fact. ain't going to be a barn burner, but it's not going back. >> let's look at the markets

again, wall street is called leading indicator, a fancy term for saying it looks ahead. goes up before the economy goes up, so, what does that show us? >> right, it's bigger than any date a plan. and this he are getting foreclosed on their house and living in cardboard boxes on the street. and to the other guests, publicly traded companies like the ones you listed earnings are going to be bad and they don't take the blame themselves for the bad earnings, and you can't always go by what they say. companies in '07 before the death spiral of the economy were optimistic, thanks to making loans, you can't always build by the surveys, the stock market is not perfect, but probably the most perfect leading economic indicator, because it almost always starts to slide at, near or before in the peak of the business cycle. at least 10% or more, when they look back and the economy peaked at that point and that's not the case and definitely in the entered a recession if you look at the

stock market. >> gary b, looking at the stock market, you're famous for that, in fact, we call you the chart man and look at overall trends. what is the stock market telling you about the economy, going up, down, side ways? >> well, if you believe that the stock market is, as you say a leading indicator. you would think that the economy is going up. i am not convinced. i think that the-- the coordination, the correlation between the economy and the stock market is always ten use at best. the things i look at, for the economy and i'll state clearly that i'm squarely in the middle here, i think the economy is at best moving side ways and i think we've been moving side ways, the things that count. look, unemployment. we've talked before, is inching down, but it's still, i think, anyone would admit, it's still at super high levels, it's a lot higher than the obama administration thought it was going to be at this point. and it's a lot higher than anyone was at this point. even the ones that are the

biggest admirers of the current administration. the second thing is disposable income is inching up, but you don't have a dollar more in your pocket now than you did back in 2008. it's flat since then and i think that toby mentioned housing problems, they're informing up. unless you bought a house before 2000, you haven't made a time and that's what people look for. >> brenda: oh, i'm very depressed. you took the smile off my face, i'm depressed. >> you probably bought your house in 1999, so you're in-- >> let me ask julian, the fiscal give. what is on your radar screen and telling you where the economy is headed? >> you look at all the indicators, look at gdp when obama started, negative 9 and now forecast positive 2, 11 point positive swing, losing #00,000 jobs a month and the forecasters say we're gaining at least 100,000 or more, a

positive 900 or million swing per month in jobs, at 6 plus in the stock market, that's doubled. if you look at investor confidence, investor confidence is up, consumer confidence is up, home sales are up. home construction is up. personal debt is down. of course, you can find a few companies like fed ex that will say that things aren't as good for the reasons that jonas said, but fed ex is looking at other things, looking at the trouble in the manufacturing sector and looking at global threats, but possible to look at data-- it's impossible to look at the data and say that things aren't improving. >> brenda: you take a look at the data, do you find it possible? >> yeah, third and fourth quarter, it's not just fed ex, earnings are down. that's the data points and you can talk about job improvement if you want, the fact is, more people are unemployed now or off the payrolls, than when obama took office. things are not getting better. the labor force participation

rate is the lowest that it's been in 30 years, now, are we moving north of zero? maybe. but the fact of the matter is, it's at stall speed and every time we've moved this slow in our history, we've gone back into recession, forget about the fiscal cliff, too, that's going to create more problems. >> well, we probably all agree on the fiscal cliff. the point that i made before that you didn't respond to. is that the fed is now projecting that we will see gdp growth-- >> that's not, that's the single most important indicator. >> okay, toby, gdp growth of 2%, what does that say about where the economy may be going? how long does that keep us going? >> it says two things, one thing is says we are recovering. it also says that we could be at 4% if we hadn't shackled our economy with new laws and not going after the energy, business the way we could be doing. you know, if we look the at areas where we could unleash the we could go back.

>> it's north of two, between 2.5 and 3 according to the fed. >> and i want to go to jonas to get a read here. >> it's sluggish, but stocks might be anticipating growth and could be among, stocks have gone off before and the market economy never followed along, it's likely we're saying we're not in in a recession and probably going to be in a bert situation in a year or two based on the direction of the stocks, now, it could be wrong we could have trouble next we are, but right now the best guess using the stock market, which is more reliable than the ceo's-- >> back to gary b. >> i'm look shaking my head when julian is talking about how rosie things are, the unemployment rate, could cause a joy of celebration there and the other thing gdp. if the government condition scripts our money through taxes and spends on a million solyndras, it's going to bump up gdp.

that doesn't mean there's real growth in real businesses. >> excuse me, you guys put words in my mouth and said the trend is headed in the right direction. >> you made it seem rosie. >> brenda: toby is kicking me under the table because i have to say one thing, it feels bad out there. they don't have jobs or confidence levels that are up. so incomes are down. toby, what does it tell you? >> it says that many of these people in the united states are not participating in whatever growth that we're having and that is a fact that i think is in controversy. >> brenda: i think i've got a bruise now. you get the last word though. all right, you want to bring down this number? the neil gang says bring down this number. the 47% who don't pay federal income taxes, and that's at the bottom of the hour, and did a new report just prove mitt was right? ♪

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and no word why. jamie colby on fox. >> brenda: next, lashing out the at governor romney for saying that too many people are dependent on the government. and on food stamps able to work more than double 2010. and during the the same time the obama administration temporarily waived the welfare to work requirement. and gary b, you say no coincidence, huh? >> absolutely, i say no coincidence and 46 million people on food stamps say no

coincidence. look it, the fact of the matter is, you can be the most moral, ethical, nicest, hardest working person in the world, but if you have an incentive out there to either work or not work, and get money in the form of food stamps, what are you going to do? i'm not going to work, i wouldn't work, for crying out loud if i didn't have to. you go out there, you put the carrot in front of people, now you don't have to work, you still get the food stamps and my gosh, this is a no-brainer. that's why, as you say, we've soon the number double in the last few years, it's quadrupled the number on food stamps since 2001 and it should be obviously to everyone. >> brenda: gary, you can't call what you do on bulls and bears, work. >> noticed. >> brenda: and julian, wouldn't waeakening in the economy lead to the number of people on food stamps? >> yes, a central point. a couple of facts here, most of the entitlement spending is spent on seniors, two-thirds, the one demographic that

happens to be in romney's camp. secondly, under the bush administration, the number of food stamp recipient grew far more than under the obama administration, third point is it that the waiver of the welfare work requirements has been debunked by every single fact check organization, as a lie. fourth, what happened with respect to the extension of the food stamp eligibility and there was a temporary extension for the three month limit to get food stamps because unemployment was so high. and that expired and the number of recipients is going down. >> brenda: tony, six, and i think he was five, six? go ahead, take over, toby. >> i'm a simple person, all i know when i looked at the research from the congressional study reports, that they said, there was a normal amount of increase in food stamps and welfare during, you know, the great recession, but if you take the able bodied side, the side of people that would have normally, you know, increased at a normal rate, it increased double the rate. so, i agree with gary, you

can't argue this statistical fact that it's increased double the rate when the rules were changed and made it easier to get welfare, but, look, what bothers me more about the whole thing, now that we're paying for food stamp with food housing bills and we have to hide this and haven't gotten into this. >> brenda: food stamps may be overused, but is it because of the policy. >> this expired and some states like delaware didn't opt in and they're like the leaders in food stamps in the country and isn't it fundamental? i don't think that people who had jobs in '06 want to be on food stamps, i think they would rather have a job. getting to my original point which i think that obama is taking heat for the symptoms of poverty and not the source, which he's more to blame for, not having policy for the bottom third of the country, displaced and the collapse, knows the existing poverty

programs growing radically because these people can't find jobs. >> brenda: and welfare where do you stand on this. >> take a look at the history of united states, and any country with programs, long unemployment benefits. anytime they've shortened the program, people have gone to work more quickly. a lot of people have not gone back to work they can't get the same job they had. can't get the same pay they had in 2007 so they simply haven't gone back to work and still looking for something to replace that income. if you shorten their benefits, the fact is, that they're going to be more incentive to go out and find work and pay, we have a president that operates on feel-good economics, the exact same economics that are drawn up by pot smoking, college sophomores, the same feel-good we're going to ride the unicorn down to the rainbow and the pot of gold is going

to be there. >> you say stuff so divorced from reality. the entire reason why this temporary extension of eligibility for food stamps was temporary, was for the exact reason that you just said. it expired in 2010. >> i know, but-- >> the number of recipients are going down. nobody's responded to the fact that there were more-- >> okay, okay, hold on. >> recipients under the bush administration-- >> jim, quickly, ten seconds to responds. >> we stretched the programs out and may have shortened one here or there, but the programs are far beyond where the president took office. >> brenda: that's got to be the last word. 6 million of you out there are going to be hit with a health care law fine with a total cost of 8 billion bucks a year and someone here says that's not the worst of it. copd makes it hard to breathe,

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>> i hate to that these guys told you so, but the congressional budget office say the health care law will slap 6 million americans with a fine for not having insurance and all of those fines will add up to 8 billion dollars a year, this has got to hit the middle class. you've been warning about this, how bad is it going to get. >> a lot worse and here is why. we'll probably have more people get the fines as bad as the fines are for under 40-year-old reasonably healthy people in small businesses it's cheap tower pay the fine and that's the whole point this have argument. it's cheaper to pay the fine

than to participate in the way the health care system is set up. guess what? they're going to have to raise the fine up to probably $2500 to $3,000 to deincentivize people from paying the fine. that's the fact and happened in every other society where you fine against behavior you want to have, it's going to happen here. >> brenda: julian? >> we just got finished talking about people taking personal responsibility. we've known there would be 5 to 6 million freeloaders who want the rest of us to pay their health insurance and that would be reality under the new health care law. and i mean, we focus on that, we don't focus on the fact that the cbo now says that we will see premiums go down 4 to 11% and don't focus on the fact of the conversation the small businesses are getting a 50% of their health care costs at tax rebate and we don't focus on the fact that, 19 million americans will get 5500 in rebates under the new law or 129 million americans won't be subject to pre-existing conditions in their he health care, i mean, there are so many benefits for such a big portion of the population, we're talking

about a penalty here on free riders, people that don't take responsibility because they want us to pay the bill to the tune of 100 to 200 billion dollars a year. >> brenda: okay. gary b, you call them free loaders? is this going to hurt the economy? >> i think it's going to hurt the economy for two reasons, one, i don't think the number is going to be 6 million, i think it's going to be a lot more than that. the problem is that the irs is going to have a hard time finding that. is it within their capabilities if i have blue cross/blue shield or don't or make up a phony number on my tax form? i don't think so, i think a lot of people are going to find ways around and it the number probably 12 million. second of all for this money if you think the government spends money more efficiently than i do, a good thing. make my fine and spend it, but i don't think that's how government works. any dolly give them through taxes or fines, whatever, is going to be spent inefficient and has to hurt the economy. >> brenda: i've got to move on. jim, do you think it's going to hurt small business?

>> i think it will hurt small business, but the fact of the matter is, how are they going to track the people down, these are people that hardly pay for anything that are doing this. toby said it exactly right. if you pay people, if it costs you more to, to buy the insurance, than it does to pay the fine, air going to pay the fine. so, yes, it's going to have an impact on the economy. >> brenda: jonas, the final word. the cost benefit. >> yes, it's going to grow, more people paying it, cheaper than the insurance, so, yeah, but the bottom line. but it's not lost money, they're going to hospitals and footing the bill and customers by higher insurance premiums. a lot is forced for them to pay their way. the bottom line is to get money out of people to pay their way. >> brenda: thanks for julian. >> thanks for having me snoot lines were crazy over the iphone. crazed? but someone says apple's new hot phone has one feature

that's a disaster and one is spa that will profit from that. that. >> the iphone ally bank. that. >> the iphone why they have a raise your rate cd. tonight our guest, thomas sargent. nobel laureate in economics, and one of the most cited economists in the world. professor sargent, can you tell me what cd rates will be in two years? no.

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>> predictions, toby, you're up. >> all of those iphones. >> brenda: gary b. bull or bear. >> bear, up too much to far. >> brenda: jonas your predictions. >> apple made mistake