tv The Kudlow Report CNBC July 1, 2013 7:00pm-8:01pm EDT
if you bought onyx off our endlessly repeated recommendation, what i want you to do is take out enough money you're only playing with the house. that way, if the stock keeps going up, you can't lose. if you walk away, boom, you're going to do fine. this is "mad money." i'm jim cramer. i'll see you tomorrow. the second half of 2013 opened up with a handsome stock rally. here's a thought. can stocks rally back to their old highs before the fed starts pulling money out of the economy? or here's another thought. will fed tightening just rule the roost, knock down stock prices, and create a very bumpy ride for investors? we'll debate all that. look at these live pictures. is there a coup coming in egypt in the next 48 hours? the muslim brotherhood and its morsi regime are falling apart before our eyes. we're going to have a report from cairo. as we approach july 4th,
independence day, don't forget, in the spirit of life, liberty, and the pursuit of happiness, how about buy america, everyone? we've got a bumpl of ceos tonight who are making all their products at home in america. they want you to know that, and they want the government to get out of the way to make it easier. all those stories and more coming up on "the kudlow report," beginning right now. first up this evening, might start the second half of the year on a pretty good year. here's my very quick take on this. the fed is going to end qe, and hopefully it's going to move towards free market economics, but i worry about deflating gold and commodity prices.
so i'm still not 100% sure the timing is exactly right. long run, this thing could turn out great for america. color me on optimist. short run, caveat emptor. let's welcome our all star investment panel. lisanne sanders, chief investment analyst at charles shaub. jeremy siegel, professor of finance at warden, and zane brown, fixed income strategist at lord abbott. welcome back, everybody. lizanne, let me begin with you. is good news, good news in the stock market? is good news like a decent ism report, which may get you closer to pulling qe out? good news or bad news? >> i thinked good news is good news. i think we're past the era where bad news is good news. there was some view the market rally came because of the downward revision to q1 gdp. i disagree with that. i think it's a backward looking number, and the markets had reasons to rally.
i think at this stage you want to root for good news. it's the back drop to the market. >> even so, liz ann, just to follow up, the better the economy, the more likely it is the fed will withdraw cash from the banking system. >> that's okay, though. it's time for the fed to move toward more normal monetary policy. i think at this stage the strategy surrounding the exit and the path we're going to be on is more a hindrance to growth than it is a help to growth. i think it's about time we started to move toward normal policy. i agree with you. i think there's bumps along the way but ultimately the right move. >> jeff, do you agree with liz ann's relatively optimistic point of view? >> relatively, yes, i do agree. i think it's a lot bumpier than a lot of folks expected. here in chicago, we saw the ism number come out pretty neutral. employment index was disappointing. that was the component we were looking at and have been focused on today. sure enough, at the end of the day, a 100-point drop in the dow jones off of nothing. this inconsistent message out of the fed, keeping a lot of
investors perplexed, it's going to last a lot longer. now it's pushed back to september meeting, right? >> that's my guess. that may or may not be right. i have no idea. the fed speaks with forked tongue when it gets into all this stuff. before i get to my pal jeremy siegel, i want to get to zane brown. one thing for sure, people are stampeding out of bonds. we know that for sure. that should affect stock market valuations at some point. what i really want to know is, when people sell their bonds, their treasuries, their corporates, their munis, where do they put the cash? >> it's not going into stocks. this is not the beginning of the great rotation. we saw money going into bonds the first five months of the year, and it came out wholesale, twice as fast as it went in, and it's going to cash. it's going to cash and bank deposits. people are just hiding at this point. they are not going back into stocks. >> they are not going back into stocks. do you have any sense why they won't go back into stocks? >> i think the people who have owned bonds and have been fascinated with them, suddenly, they've had the rug pulled out from underneath them. they're not sure how quickly the
fed is going to act, and they're very concerned, especially those owners of high quality securities. >> jeremy siegel, are you still the quintessential optimist regarding the outlook for the stock market? >> yeah, i'm still an optimist here. we're under 15 for the price earnings ratio. we are still in a low interest rate environment, which generally gives the ratio higher at 18 and 19. we have upside there. and i want to correct you a little bit there, larry. in september, they're not going to withdraw cash. they're going to add cash at a slower rate. >> i know, but i looked at it in first differences. professor siegel, i'm an old fed guy, and i'm going to make a little bit of an argument because i think the change, the rate of change is very important. and if the fed buys fewer bonds, that means they're adding less
cash. yes, they're adding cash, but less so. and that's going to slow down the monetary base, and that could have a negative impact on the money supply. that's what i'm referring to. that troubles me, by the way, but that's why i say that. >> well, i hear you, but something else also. remember how data contingent. bernanke said the policy was. and you're worried about deflation. i'm not quite as worried, but he mentioned that, if deflation threatens, they will not withdraw qe. remember, larry, it was deflation that instituted the first qe two years ago. the threat of deflation. so they're sensitive to that. >> fair enough although it's sort of hard to know exactly what their targets are. i guess that's one of my criticisms. i wish we had clearer rules and targets regarding fed policy. but liz ann sonders, let me come back to you. maybe i'm overestimating the importance of this, but we're seeing deflationary price drops
in gold and commodities and commodity indexes. what does that mean? >> i think it's a function to a large degree of what's happening in china with the slow down in growth. they'd been a big source behind the command. let be honest. we watched this at schwab with individual investors. so you had the inflation hedge piece of it. you had the currency hedge piece of it. you had the global instability hedge piece of it. a lot of those have diminished, and you just had, quite frankly, the performance chasing piece. a lot of this is last in, first out money, but more fundamentally, i think it's a function of what's happening in china, and i'm not so sure that's necessarily a bad thing for the u.s. economy. we're finally in an environment, first time in ten years, where we have growth, not great growth, but okay growth, decent private sector growth without the inflationary forces. i think that's a good thing. >> even though, zane, we don't see much growth in europe. europe is in the seventh quarter of a double dip recession. the emerging markets are in a
lot of trouble, in part because of our policies, in part because of their policies. yes, there is china's difficulties. do you expect bond rates to rise more in the near term this summer? price is down. rates up. what's your outlook? >> i think hopefully the fed is data dependent. they don't raise rates if they don't see the economic growth that they at least foresee. but my fear is that people will come to the realization that the fed may be pretty adamant about their moves, and you might get a further back up at least in high quality rates. treasury rates, aaa securities, i'm not so sure you get additional backup in things like municipals and in high yield bonds. i think they may be a little stickier at current yields. >> jeremy siegel, can stocks withstand another round of rate hikes. again, any time these medium and long-term rates change, as you well know, jeremy, it does affect the valuation of share
prices. >> oh, yeah. most certainly. listen, if we go to 3% on the ten year, another 50 basis points without big upward revisions of earnings, yeah, it will be bumpy. but larry, you didn't mention the most important commodity is oil. that's really not going down. you probably saw the article today that pushing the oklahoma oil, the west texas intermediate is actually rising in the u.s. that's the most important commodity. no deflation there. >> jeff, question, what about the profits outlook? in other words, if the federal reserve does slow down its bond purchases, which in my judgment means it's slowing down the money supply, do we have enough profits, enough earnings, the mother's milk of stocks, the way i look at it, in the second quarter and the third quarter and the fourth quarter to offset higher interest rates and slower cash from the fed?
>> my short answer, larry s no to that. when we saw the velocity get ingested by mr. bernanke, that really troubled me. to our other guests, we did see a big move in municipal bonds. $4.5 billion in outflow, so there's trickle l affect. are we resting our hat on earnings season to really knock it out of the park. no, we've seen a lot of guidances lower by ceos. with that type of uncertainty stemming from the fed, ceos do not know, and it comes full circle, larry. it's all about jobs. that's why we're so focused on this number on friday. >> i don't want to sound too pessimistic. i'm not. i just think transitions can be very difficult. i think there's a big transition in monetary policy coming, and i think it's going to be a lot harder short run for stocks and bonds than many of my colleagues believe. that's all. i'm not a long run bear on it, but i've got to get out of here. liz ann sonders, thank you.
jeff kilburg, same. jeremy is going to be back for more. coming up, remember when i first said this? the spending success sequester should go through as it should be on march 1st, lower spending and smaller government will keep resources in the private sector and grow the economy. all right, don't always get it right, but way back in january, i said bring on the budget cutting sequester. the president, the mainstream press, even some republicans predicted doom and gloom. guess what? you're not going to believe who's agreeing with me now. we're going to show you who in just a moment and keep our eyes on where the economy goes from here. please don't forget, free market capitalism is the best path to prosperity. if the federal reserve leaves markets alone, good for them, but i still think they need clear targets. [ female announcer ] doctors trust calcium plus vitamin d
being denied food. i argued that in the main that was all nonsense. please take a listen. let's keep the taxpayer pressure on lower spending. i say implement the sequester. i believe it is pro growth. i still do. "the washington post" -- this is great stuff "the washington post" went to work and has found none of those horrible things happened. an article today in that paper even admits there have been some positives. bestill my heart. that's about as good as we're going to get from "the washington post." is now the time for president obama's no sequester catastrophe mea culpa? don't hold your breath. we have economist steve stanley. i'm reading you this morning and jumping out of my seat and cheering your e-mail. i love it. the fact of the matter is the sequester, all the horror -- listen to this. the cbo said it would lose
750,000 jobs and 1.5% gdp. i say nonsense. >> no. i mean, obviously, there are a couple of reasons why washington would exaggerate the fears. one is quite intentionally they're looking to get more money. i think the bureaucracy and the administration was hoping to spend more. they thought, if they could make the cuts very dramatic, then perhaps congress would cave in and give them more money. i think the second thing is most of official wrb is still working off the old kaynesan multiplier models that tells them that decreased spending creates a gdp boost, and they have these huge impacts. that didn't make a lot of sense. >> well put. garbage in, garbage out. garbage multipliers in, garbage multipliers out. none of that stuff happened. if it would have happened, it would have already happened. if it would have happened in the stimulus, the economy would be growing at 6% instead of 2%. jeremy siegel, come to you.
you heard steve stanley say. i think the fed knows this. i think the fed realizes the fiscal drag from the sector is virtually nonexistent. jeremy, that's one of the reasons i believe the fed is ready to start mopping up with qe. >> i agree with you. it had to be bernanke had to be optimistic with the forecast. it was because the hawks wanted to tone down the qe, to be sure. he himself, i think, began to look at the data and say, hey, this sequester is really not slowing down the economy. by the way, i agreed with you 100%, larry. god help us if our federal government can't find 5% in his budget a fact to cutting financial services. i think it's a very, very positive factor and definitely a pro growth factor for the long run. >> is that's the thing.
that's my take. actually, spending has gone down from about 25% of gdp to less than 23% of gdp. zane, i come to you on this because we are issuing -- we, the u.s. government -- is issuing fewer bonds. the price is going down, and the rate is going up because the federal reserve policy adjustment. the reality is we are borrowing less and the debt burden is a wee bit less. >> let's hope that lasts a longer time. the expectation is that is only going to last until october, and we did do some good things in terms of raising some action at thats -- taxes, at least from a budget balancing standpoint, the payroll tax came in, and there are more revenues than what many expected. i'm not sure that is going to last much beyond october. we're going to go back to borrowing. if what we read in that well-researched article is true, what we've done so far is postpone the impact of the sequester. we've taken the easy cuts, and now we have that same 85 renewed
in october plus another new sequestration of 109. so we're not out of the woods yet. >> steve stanley, i can't wait. $109 billion out of a budget of $4 trillion out of an economy with a gdp of $17 trillion. steve stanley, i'm salivating at the prospects of smaller government and a larger private sector that will grow the american economy faster. i'm salivating. >> it's not even as big as that, larry, because it's 109 off the baseline. it's not $109 billion in cuts. it's $109 billion less than it. >> the level of spending comes down. it's the rate of growth on spending. >> jeremy siegel, i want to go back to you. i want to get the full flavor of your stock market optimism because i'm a little worried about the short run, not the long run. give me your strategy, jeremy.
how high can the stock markets go in the next couple of years knowing that we are going to see a major, major change. it may take two or three years. from very, very ultra-easy money to something like normalization. how far can markets go under that scenario, jeremy? >> a lot higher than we have today. again, long run post-war pe ratio is 16.5. we're 14.7 today. so just reaching that level. whenever interest rates, i found, stay less than double digit, you're between 18 and 19. you're going to get it, i think, through multiple expansion. because there aren't any good opportunities out there. bonds are still unattractive. they'll go down in price. look what's happened to commodities. not in a good place.
cash is still yielding zero and will yield zero for years. where do people put it? >> are you still with dow 17,000? >> i am still -- i'm saying the end of this year, 16,000 to 17,000, yes. >> i hope you're right. i truly hope you're right. but professor siegel, you are among your many other skills -- and i have read the books -- a great economic and financial historian. i have read those books, and they are bibles of mine. can you recall a period when the federal reserve makes as big a policy change as what they're about to make in the next three years? can you recall a period that necessarily ended on a happy note? is >> let's go back to '94. a bigger surprise, greenspan raised the fed funds rate without telling anyone. that was a choppy year. what happened in the next three years, larry? the stock market nearly tripled. >> this is nothing like '94. this is nothing like '94. this was massive bond buying.
this was massive cash injections. this was massive interest rate controlling, and this was massive zero rates. i mean, in all seriousness, i hope -- look, if those guys in washington cut spending, if they give us pro growth tax reform, that will really help this whole story. i'm just saying on its own merits, jeremy siegel, this will be one of the most dramatic changes in the history of federal reserve policy. i want my whole panel, you first, can it turn out okay? no recession, no collapse of stocks? >> i mean, look, there's $2 trillion of excess reserves, larry. basically, the hawks are saying, hey, do we need anymore? the banks are flooded with cash. that's the main argument. so i don't think that's going to grip lending at all into the future. >> stanley, i ask you, can this end happily? >> i think what we're going to need is we're going to need help on the fiscal side.
right now you've got this incredibly easy monetary policy, but the government is doing so many things to hold back growth. not only on the pure fiscal side, but with tax policy, the lack of tax reform, so many things on the regulatory side, and i think that's having a pretty significant negative impact on growth. if we want to overcome the drag that's going to happen when the fed inevitably normalizes policy, i think we need a friendlier set of policies from the government. >> zane bradley, just a moment, would you recommend to your bond investors -- you're principally a bond strategist even though you spring far and wide -- would you say keep take the money from bonds and keep the money in cash. or would you say an actionable event, sell your bonds and go into stocks? >> i would say sell your high quality bonds. go down in quality, go down in maturity, but buy some stocks as well. rates normalize over five years. high quality bonds are not going to do well, even over a
five-year period. get a higher coupon. as those rates normalize, those rates will compound, and you'll also do well in the stock market. >> going to get out of this recession? >> yes. >> final word, terrific. steve stanley, thanks very much. thanks for the e-mails in the morning. jeremy siegel, as always, wonderful to have you back. zane brown, we appreciate it. now, just look at the live pictures from cairo. massive crowds gathering in tahrir square all day long as the egyptian military issues an ultimatum to mohamed morsi. we have the latest on the potentially dangerous and fluid story. ♪
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geico. fifteen minutes could save you...well, you know. another day of massive protests in egypt. hundreds of thousands of people gathering in tahrir square in cairo. cnbc's youssef maldin has this report. >> reporter: an incredible sight in tahrir square, who's seen so much the past two years. you can see the fireworks behind me, people singing and chanting, joyous, celebrating, basically calling on mohamed morsi, the incumbent president, to stand down. they're saying arabic for leave, a dramatic set of developments over the last few hours as the army released its statement and made it clear in no uncertain terms that politicians have 48 hours to figure things out and that they were disappointed by the lack of progress that had
been made. they were not going to leave anything to chance. after that ultimatum was set, 48 hours began counting. we expect the protesters to remain in the square. then the army may put forward a roadmap, but they stopped short of saying they would be involved in any type of governance. the opposition has welcomed this latest development, and we understand the government is under immense pressure, the muslim brotherhood government under immense pressure to respond, and it's unclear what they will do exactly. it's a fluid situation on the whole. obviously, there are still concerns about possible clashes between the different factions. for now, it's back to you. >> many thanks to youssef. appreciate it. up next, by the way, this is july 4th week, and "the custoku report" says buy american, and we're focusing on businesses that do just that. we have three ceos from companies who make things right
here at home and we'll tell you how you all can help next up on kudlow. vo: traveling you definitely end up meeting a lot more people but a friend under water is something completely different. i met a turtle friend today so, you don't get that very often. it seemed like it was more than happy to have us in his home. so beautiful. avo: more travel. more options. more personal. whatever you're looking for expedia has more ways to help you find yours.
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obama's anti-growth, anti-jobs, and anti-american war on coal. you know who's going to benefit when the epa shuts down the coal industry? take a guess. if you guessed china, you'd be dead right. why doesn't the white house get this? first up, let's buy american. we have three ceos who are producing everything right here in the usa, and they claim they can do it cheaper, faster, and with higher quality than brand x overseas. i say to that, terrific. here now is paul grandguard, president and ceo of shoe company. paul williams, ceo of the diamond group, producer of the popular clothing hiky freeman. and plus representing america's small startup businesses, we're joined by amy bradley, inventor and ceo of toy dozer, if i got that right. >> you got that right. >> i want to ask all you guys. paul, i'll start with you. how's business? tell me how business is. let's go with there. >> there's major trends going
on. men are dressing better these days. we make only men's products, and business is very good. >> year on year, give me a hint. >> up 20%. >> and a year ago, what did it look like? >> up 20%. >> so you're wal owing in it. it's terrific. >> we're record year on record year on record year. >> doug williams, are you so blessed? >> we're up 40% year over year, and that's after a 20% increase last year. tailored clothing is rocking this year. >> people want to spend the dough and want to look great, sxuf the products. >> we do. >> amy, hang on a second. i want to cross-examine a little bit. making everything in america. how difficult is it? you've got a suit. there's multiple parts of the suit. you've got to have people working on the suit. i know a little bit about it. how difficult is it to make it all here in america? >> you can make it all here. the fabric comes from either italy or the far east. the findings will come from all over the world. but what we have more than
anyone else is the best sellers in the world, and the product that we put out, you real ly can't find anywhere. we're very proud of our team. we've had sewers in our factories over 50 years, and they're still there today. we give the consumer in the united states something they can't find. >> who does the final cuts? who does the final work? you're assembling the suit and bring the materials in. who does the final work? that's done where? >> in chicago for the schaffner marx brand. >> and that's the heart of it? >> you're right. >> amy, you started your business in mexico, didn't much care for it, and now you're in the usa. tell me about it. >> the first production run arrived from mexico completely damaged really due to poor quality control. so we had to quickly switch gears, and i looked at local manufacturing, which i hadn't done before. i assumed that i had to have this manufactured in china or mexico to make it cheaper. and i was so surprised to find
prices were cheaper right here outside philadelphia. >> this is toydozer, is that right? >> you got it. >> is they help kids and moms, whoever, get the toys stacked up. >> so legos and the little toys our kids dump on the floor, they swoop it up quickly. makes it fast and easy, and kids have fun using it. >> where do you do the manufacturing? >> in pendell, pennsylvania. >> and that's the part that got moved from mexico? >> that's right. the tooling picked up and moved to pennsylvania, and it's been an amazing experience. i can be at the factory in 20 minutes. it's the perfect scenario for the ultimate control freak, which i am, so i can be there doing the quality control myself. it's been -- i have no complaints. >> i ask you the same as i ask these clothiers, how's business? >> it's up 100% since a year ago because we just started a year ago.
but we were just picked up by walmart as a test run starting in september in 300 stores. >> and we want buy america. they're pushing that very hard? >> that's exactly right. it's been great. we didn't realize that when we moved our production. but they're very interested in our product because of that. this huge initiative we have going on, buying $50 billion in u.s.-made product over the next ten years. we're excited to be part of that. >> paul, come back to you. assembling the great shoes, where is that done? >> port washington, wisconsin. >> where does the leather come from? >> the leather comes from mostly in europe. we do most of our shoes in calfskin, and calfskin comes from veal. leather is a by-product of the food process. there's a lot more veal raised in europe than there is in the united states, of course. so germany and france and some from italy as well. >> is this stuff hand sewn? how does it work? is it put on assembly lines? who are the people that actually make the shoes?
>> the shoes start out -- the leather starts off as a complete hide, and we have to cut that first and sew each individual piece together. we have to sew the lining on that. >> and that's skilled labor? >> yes, very skilled labor. >> that's where it starts. >> and that forms an upper finally which looks like a flattened baseball cap. then you pull that over the last, which is the mold around which shoes are made. and we do all that down two lines in wisconsin. >> is it cheaper to do it here than in china or mexico or bangladesh or wherever? >> absolutely not. >> is absolutely not? is >> no, it's more expensive, but fortunately, we make a premium product. so we're able to get out of our sales price that higher cost of labor. >> and would you ever consider shifting back to a cheaper labor force, or is the skill set just something that cannot be done elsewhere? >> the only countries where shoes are made with this style are the uk and germany, france,
and italy, and then just a little bit in india. but really, this kind of style of shoe that we make, which is called a 360 degree welted shoe, is mainly made in developed countries with higher labor costs. so our competition is burdened by the same labor costs as we are, but we have third generation employees working with us in wisconsin, people whose parents and grandparents worked with us. >> okay. could you do it elsewhere if you wanted to? >> you could. you wouldn't get the premium that we get today. the consumer doesn't recognize offshore product anywhere close to american made or made in italy. so it's just not an advantage for us to do that. >> so you have to pay a little more, same story. >> yeah, and we get a better quality of labor because of that. >> is but you've got clientele that will do it? >> absolutely. >> is and you're up, what did you tell me, 20%? is >> 40%. >> 40% is pretty darn good. >> it's great.
>> let me just go back. at the peak of the last boom, 2004, 2005, 2006, what were your year over year comparisons? >> our company actually was part of a big corporation, hard marx, that went bankrupt in august of 2009. we actually went through another bankruptcy. last year we were owned by an indian parent company who didn't provide the financing. so my family and i, we really stepped up to the plate and said, we know we can compete in made in america. and we bought the company. we're just seeing spectacular results. >> hang on. paul grangaard, ed williams, amy bradley, stay right where you are. we have much more to do. next up, you want to ask you about corporate tax, regulatory hurdles facing american businesses, what are you going to do about obama care? that's next up. buy america, everybody. it's the july 4th independence day week. and you can buy america the other 51 weeks too. i'm kudlow. please stay with us. hey! did you know that honey nut cheerios
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liberty mutual insurance -- responsibility. what's your policy? wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less after $10 mail-in rebate at your participating ford dealer. so you gotta take care of yourself? yes you do. you gotta take care of your baby? oh yeah! we are talking buy america with three very important representatives of american companies that i want you to think about this july 4th, independence week. here's the question, beginning this segment. presidents ronald reagan, george h.w. bush, bill clinton, and
george w. bush all chose to wear allen edmonds park avenue shoes at their inauguration. who's missing from this list? we're back with made in america ceos, paul grangaard, amy williams, and doug bradley. >> you hate to have a streak end. president obama has worn our shoes. i saw him on jay leno show wearing our shoes. >> he is well dressed. can't take that away from him. but i was crushed he didn't wear them to the inauguration. >> we were very disappointed to see the streak come to an end. that just gives you another chance to start a new streak. >> does he have a hickey freeman suit? >> he actually wore the chapman marks suit to the inauguration. >> i knew that. is he a good customer? >> he is a very good customer. >> do you help fit him? >> i don't fit him. we have a team in chicago that does that. he's a wonderful customer of ours. >> amy, does he buy your
toydozers? is >> he's a little old unfortunately. so no. >> not yet. you moved from mexico to outside philadelphia, and you're still in the incubation stage or just out of it. what are the biggest obstacles for you right now? what would you like to see changed so you could do better as an entrepreneur? >> my concern f we', if we're t about obamacare and all that stuff, we are still so small. i'm the only employee basically, but my plastics manufacturer certainly has more than 100 employees, and i worry that their prices will go up and their costs will go up. so my costs will go up. i do worry about that. other than that, they are strict safety laws in effect that i have to abide by for toys, which isn't a complaint, but i have to
comply with the astm and cpsia. all of that is very costly. >> do you get a lot of inspectors coming around? if they charge you, do you pay a fine? what are you going to do? they're not going to throw you in jail. >> they might. they could take your business away from you, sure. if you find a product that has problems in it and you weren't tested for that, you could be in trouble. it needs to be more streamlined. i searched the internet for weeks to tell me what tests i need for my product, and they just really don't tell you. i'd like to see that. >> a little lighter on the regulations. paul, what troubles you the most? are you family owned? privately held? >> we're owned by a private equity firm. goldner, hahn, johnson and morrison did a tremendous job building it over the last seven years. >> let me ask you about the tax burden. >> tax burden is not a big problem for us. >> you didn't get hit by the january 1st tax hike, is that correct? >> we didn't. >> because you're part of this pe operation? >> no. our big issue is health care.
we got a surprising burden of health care costs in the first half of this year, which just dilutes our ability to reinvest in our business. >> and you're privately owned. >> we're family owned. >> you got whacked on the tax bill. you got whacked on the obama tax bill. who knows what the future holds? how big a problem is that for you? >> it's a challenge. when you're paying 40% on every incremental dollar, it's tough. the way that we look at it is we have an amazing operation. we have wonderful people who work for us. and here, we'd actually like the government to get gridlock out of the way more so than even changing tax rates because we need certainty, and the hardest thing as a ceo to operate today is trying to guess what the decisions are going to be made tomorrow. >> but most of these other countries -- i think it's true for a lot. most of these other countries have lower tax burdens than we do. that's got to hurt. >> is it hurts. >> is it comes off your bottom
line. it's got to hurt. >> the biggest issue more than the tax code is the uncertainty of of the business climate. if we could get that out of the way. >> tell me more. what does that mean? >> people in the united states don't know where congress is taking the entire economy. what is the industrial policy? do we celebrate manufacturing in this country the way other countries do? >> cowe celebrate, to all of you, made in america sufficiently? we hear references to it. the president had it in his inaugural statements, and a whole bunch of rigmarole, i'm going to subsidize this and subsidize that. the whole message got lost in government spending and taxing. i'm going to ask you, just pure made in america. i didn't know your stuff was basically made in america. i didn't know thacht. i didn't know your stuff was basically made in america, and i know something about clothing. why don't we advertise that more? why don't we get that out there? >> i think it's up to us as the brand owners and the companies
to get the message out there. between paul and myself and amy, that's why we're here tonight. this is important. if you think about it, every manufacturing job in the united states, it supports four other jobs in the economy. i think everybody forgets, you have a choice every day when you go into your closet what you're going to put on. if you just bought one piece of apparel made in the usa every year, that's $20 billion of incremental revenue in our economy. companies like ours, we support our communities, and we really want to see, more so than when the olympics comes around, say you have to be made in the usa, you make that conscious choice every day. >> when you get big enough, will you advertise made in america? >> of course. oh, yeah. it's huge. people are looking for products that are made in america, and i think it's becoming bigger and bigger the more we talk about it. >> it is. >> and you have to keep talking about it because there's still many people out there who don't realize how important it is that we're helping to grow the economy. >> i've got to get out.
all i can say is july 4th week is not the only week you can buy in america, folks. i plebe in life, liberty, and the pursuit of happiness in america. we should not forget that. paul grangaard, ed williams, amy bradley, thank you. you're all terrific. speaking of made in america, how about coal? it's made in america, but unfortunately, president obama is waging war on it. one big winner is going to be china. head of natural resources is about to join us next on kudlow. . ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪
why is the obama administration waging war against king coal? the u.s. is the saudi arabia of coal. gigantic job creation, by the way. why in the world would obama want to shut this industry down? let's talk. joining us now is mr. kevin crutchfield, he's the chairman and chief executive officer of america's third largest coal producer, alpha natural resources. mr. crutchfield, welcome to the show. to study this issue, which makes my blood boil -- i'm not even in the coal business, but it makes my blood boil. i've come up with two factoids, tell me how it helps you and the rest of the industry. factoid number one, coal emissions are actually coming down in the united states, if i have that right. number two, china's consumption of coal is gigantic and rising rapidly. i don't get that, why we would
come after coal, but you tell me. >> look, i don't have a clue either because coal represents today 40% of america's energy, and frankly, it's been one of the fuels that has created the level of economic prosperity we enjoy in this country, and why we'd want to turn our backs on such a fuel absolutely defies logic in many respects. i think you're exactly right. coal emissions have been coming down steadily in the last couple of decades. a new coal plant today is 90% more efficient from an emissions perspective than the legacy plant it replaces. china issing going to be the b beneficia beneficiary. they burn half the world's coal. the world uses 8 billion tons, and china is going to be the beneficiary of these misguided policie policies. >> if the epa won't let you do what you do, produce coal, if you can't sell to china, who's going to sell to china? china has insatiable demand.
i should also add india to that. if you don't sell, who's going to sell it? >> that's a good question. from the president's speech perspective, he talked about this clean energy policy was going to lower electricity prices in the united states. i'm not sure how that can be could be true. they said the same thing with the affordable care act before they implemented that, and we see how that's going. i think the beneficiaries of that are going to be other economies of the world that are going to serve the needs of china and india. unfortunately, the u.s. is going to be in a less competitive position than we have been heretofore. that's very unfortunate. >> if we're criticizing american coal production, somebody -- i don't know, the saudi arabians, whoever -- they're going to step in and sell to china. the chinese are very open about it. there's a big story this weekend in investor's business daily about how much coal they intend to consume in the period ahead. let me ask you this. this is the dirty pool part. the epa, they've come up with this new social cost of carbon.
i'm sure you're aware of it. i'm sure you saw "the wall street journal" editorial. they have figured out without anybody signing off on this in the congress, new fangled ways to estimate the benefits and costs of coal and carbon emissions from coal. only nobody knows where they got these numbers, and that's what's going to put you behind the 8 ball. i dare say, i predict natural gas is going to be next. why can't the congress help you and check out and restrain the epa with this new fangled model that nobody knows anything about. >> well, that is the unfortunate part of this scenario in which we find ourselves. this administration has become very adept at avoiding the legislative process and implementing its will on the american people via regulatory fiat. i assure you we're going to hold our folks in congress' feet to the fire when it comes to this argument. this is not only a war on coal, this is a war on americans. it's a war on affordable, abundant, reliable energy, and it's a war on the consumers of
the united states. i believe the american people, once they figure out what's going on, are going to put a very stiff resistance because this is a behind the scenes sort of activity in which the epa has no basis for moving forward, unfortunately. >> you know, just in our last minute, sir, yes, we know that carbon emissions come from coal. >> absolutely. >> is we also know there's been no climate change in 16 years. we also know that a lot of scientists are now second guessing some of the work. it seems to me you all ought to make a stink about that because the science here looks to me like it's pretty politicized. i'll leave the last 30 seconds to you. >> it is absolutely politicized. many of us say the science is settled, but i think the one thing that's really clear here, coal is the main course on the menu, but the president in his speech also referred to natural gas. on the one hand, he basically instructed the electric utility
industry to switch from coal to natural gas, and then three seconds later he basically refers to natural gas as a bridge fuel. what i would ask is a bridge to where. what that means to me is natural gas is on the menu as well. all fossil fuels are on the menu. that's very fortunate. >> you are so right. they're going to go after natural gas, fracking, i know. kevin, thank you very much. that's it for tonight's show. tomorrow another great night of made in america panel. mao company is going to show you how to do it. cause as you get older you start breaking down. how to do it. o company is going how to do it. o company is goingu how to do it. r company is going you how to do it. e company is g you how to do it. with the works. $29.95 or less after $10 mail-in rebate at your participating ford dealer. so you gotta take care of yourself? yes you do. you gotta take care of your baby? oh yeah! it's been that way since the day you met.
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>> tonight on the car chasers... you wanna hop in my ride? it's all hands on deck... >> yeah, there's something wrong. >> as we prepare for the oklahoma city car auction. i mean, if this was a person, it'd need life support. look how much it's bleedin'. but will a freak storm freeze us in our tracks? >> the roads are so icy. holy smokes. oh, [bleep]! >> [gasps] oh! >> and when bidding grinds to a halt... 11 grand? this is hurtin' me, bubba. i've gotta act fast... now we gotta make money, 'cause so far we're in the hole. or we'll be coming home empty-handed. >> tell jeff to lift the reserve. let me sell the car. let me sell the automobile. my name is jeff allen. i buy, fix, and flip cars.