tv The Kudlow Report CNBC August 6, 2013 7:00pm-8:01pm EDT
i like to say, there's always a bull market somewhere and i promise to try to find it just for you, right here on "mad money." i'm jim cramer. see you tomorrow! tomorrow! a revolutionary change in the newspaper business happening before our eyes. prices are crashing, and yeah, the digital shift is changing. but you know what? these big papers were too liberal in their content too often, paying no attention to their center-right readers. and we'll see if jeff bezos can change that with his new "washington post." another week, another so-called major speech from president obama. he says he's ending fannie mae and freddie mac. but i see at least one if not two new government insurance plans. is anything really changing here besides rhetoric?
and as the time warner/cbs blackout continues here's the big question. will this speed up the demise of the cable tv model? more and more americans are looking into cutting that cord. all those stories and much more coming up in "the kudlow report," beginning right now. good evening, everyone. i'm larry kudlow. this is "the kudlow report." first up tonight, a major shake-up at two of the country's most influential newspapers. after four generations of family ownership the "washington post" is selling to amazon ceo jeff bezos. this coming on the heels of the "new york times" fire sale of the "boston globe," unloading the paper to red sox owner john henry for seven cents on the dollar. so what do the "washington post," "the new york times," "the boston globe," and let's add the "l.a. times" and the "chicago tribune," what do they all have in common? well, they're flunking the digital revolution.
they're also ignoring center-right conservative readers. and therefore, they're getting slammed by new media competition. at least that's my take. so here's my question. can bad content be a killer for these crashing newspapers? let's talk. we have mark walsh, co-host of "left jab" on sirius radio, and syndicated columnist radio host hue hewitt and michael medved. as i live and breathe. thank you, gentlemen. hugh hewitt-i want to get your take on this. i think that part of this story is that they're not talking to their suburban readers, their moderates, their center-right readers, it's just content people don't want and they can go elsewhere now on the web. >> exactly right, larry. i don't know if there is any besides jeff jacoby at "the boston globe" who writes for our audience. over at the "washington post" you've got of course jennifer rubin. but most of these old media properties, it would be like amazon.com only selling books by liberals. and this is a great innovation because they are going to
understand you've got to serve every single customer. i think amazon's probably the best customer service company in the united states at work right now. i hope they bring that to the "post." >> so basically, i'm arguing, mike medved, too liberal and it's really hurt them. they probably don't agree with that, and mark walsh is going to disagree with that. but here's where i'm going, michael. in a business sense, okay? bezos -- i'm not going to paint bezos out to be anything. he doesn't like unions. he doesn't like higher state sales taxes. he is in favor of the national internet tax. i think he's a mixed bag. kind of a silicon valley, or in his case washington, state of washington libertarian. but what i'm saying is isn't he going to use all the data that amazon has collected, massive data, to find out what his new customers really want? and isn't that what the "washington post" failed to do? >> i think you're exactly right. and one thing about bezos is he's -- a lot of people saying he's more libertarian.
out here he was very involved. he gave millions of dollars in the state of washington to support what he calls marriage equality, which is redefining marriage. so i think he probably leans to the left. but i think he leans toward profit. and that's what we're talking about here. there's a lot of room in national newspapers in between the "wall street journal" and the "new york times." and i think his right play is to go right for that middle ground which the "washington post" hasn't done. it's just basically been an inside the beltway version of the "new york times" and doing -- aiming it nor at the ground between the journal and the times as that national publication and going for that national status, not just inside the beltway. i think there's a lot of room for growth and he probably made a good investment today. >> i know. i think you're absolutely right. mark walsh, "wall street journal" does talk to the center-right crowd. they're doing very well. they've adopted to the digital age very well. i think mike medved is right. jeff bezos made a hell of an acquisition. now for the first time in i
don't know how long the new "washington post" or whatever it's going to be called might actually appeal to some moderate readers, the people they've been scoffing at and turning their nose up for all these years under ben bradley and everybody else that's been running that newspaper. >> i like your term scoffing and turning up your nose. listen, i reject the basic premise of the start of your show, larry. >> you're kidding. >> there's no successful, at least very few, if any, successful publicly traded newspaper companies. the public markets don't look at the profits that today's newspaper business delivers. it's not about connectictent. it's about the cost structure of delivering a daily newspaper is no longer appropriate for america's households. if your two guests were correct, then "usa today" would be making a billion dollars a year. they're not. the newspaper industry is the issue, not the content. there are many newspapers that chase the so-called middle that you think the "washington post" is turning up its nose at. but none of them are making money. the structure is no longer appropriate for today's -- >> who's making money? just for the heck of it, who --
which left-wing operation turning up its nose at ordinary people is making money? >> politico is. >> who? >> i think politico is left of center and they're probably making money, larry, because they -- >> huffington post. >> -- don't have any of those overhead costs. and i think the "washington examiner witt which is right of center is making money. but the post is dying not because it doesn't have the technological advantages mike's referring to. it's because their very talented reporters -- i'm going to say dan balz is the best in the business, dan wilbers, rajiv chandrasakaran best in the business. but when you look at their other con fent, ezra klein, greg sargent, very talented, but they're all hard left. and there's no reason for me or mike medved to go there. >> i'm going to interrupt. you look at some of these numbers that have been printed today. everybody's doing stories on this, of course. their readership circulation, i'm talking the "washington post," readership circulation the last ten years down about 40%.
okay? the stock itself is down 43%. warren buffett turned out maybe not to have quite the great investment. michael medved, i just can't believe content doesn't matter. and i want to make another point. i think that bezos over time will bring in new editorial people. i really think that's going to change, too. what's your take on that? >> yeah, i agree with you. it's one of those things. one of the things murdoch changed when he took over the "wall street journal" is there's more lifestyle, more carts, more culture focus, and the "washington post" really does need that. because the question you have to ask yourself is why would somebody who already gets "the new york times" or is addicted to the "new york times" want to go over to the post, which has been basically a pale cousin? but i think one of the things that bezos understands, and he understands it very well-s that people go to a newspaper, not just for news. the "wall street journal's" done very, very well with enhancing the personal journal, with enhancing the weekend journal, with having these things about
mansions and clothes and lifestyle and fashion. and maybe hugh hewitt and i don't focus as much on that, but there are a lot of people out there, some of them maybe even female, who do. >> i actually love it -- by the way, i love their book review section. i like their style section. i think that stuff is great. so mike walsh, i think somebody put your finger on, it maybe it was you, i don't know who else, bezos is the quintessential customer service guy. okay? >> yes. >> i buy basically all my books from amazon.com. okay? i buy other stuff, but i buy all my books. so they're always sending me e-mails, constantly sending me e-mails asking me if i want this because it's just like that. or do i want that because it's just like the one i just bought. i mean, that's incredible. if they take the pulse of their audience in the newspaper business the way they've done it so well online, they are going to succeed because hugh, i hate to -- i mean mark, i hate to clue you in. this is a center-right country. this is not a far left country.
this may come as a new idea for you. but trust me on this, pal. it's a center-right country. and that includes the virginia suburbs. and the maryland suburbs. and all the other places the "washington post" sells to. >> well, let me tell you guys a quick thing here. there's an old line in the media business, and i've spent a lot of time with the digital newspaper industry. i'm an adviser to the online news association and stuff like that. the line is you're taking print dollars into digital dimes and now mobile pennies. the cost structure is what i'm talking about here. you guys are suggesting that the "washington post" failed because it did not provide content to what its readers wanted. that is absolutely false. the "washington post" has a wide variety of content. you've described columnists in it that people would like to read. the issue is can you buy the content you like from the few columnists you guys have mentioned? and that's what the web provides. the "washington post" has to make an entire paper with different viewpoints in it, make it, physically deliver it. that cost structure for all newspapers is over. content is -- >> but hugh, it's not a closed
universe, hugh. there's new media. there's new media content everywhere. the "post" is competing with, i don't know, i'm going to say hundreds, maybe thousands of new medias. and you've got your bloggers and you've got your social media. i mean, it's a pretty competitive world out there. it's not just the "post." >> larry, i was talking to rick newcombe before i came on, creator, syndicate founder. i believe he syndicates you. >> he does indeed. he's a good man. >> and rick is overjoyed about this because it represents the infusion of capital into an industry that is just completely hidebound, full of elitism, full of mainstream media prejudice, full of old school networks, and it blows the doors off and it says if you have talent come write for us. and good talent, the byline is the brand. good talent will bring eyes. that's why michael's column, for example, in "usa today" gets more readers than i will bet any syndicated column in the "washington post" except for krauthammer or probably dr. k gets more. but it's about the talent. it's not about overhead, mark.
you're wrong. >> who should be the new editor in chief? who should be new editor in chief? >> larry. >> brett stevens. >> brett stevens? okay. mike medved, who's your pick for the new editor in chief? >> krauthammer if he can make the time. because he's already there. >> mark walsh, who's your new editor in chief? >> you are, larry. >> we can't use max. we can't use leonard. who do you want now as they move toward the center? who's your pick? >> i think the current guy's doing a great job, larry. look, you guys just if i may make one quick point, all you're talking about when you describe the issues surrounding this brand are the opinion pieces. you're not talking about news gathering and hyperlocal news. the presentation of the school board meeting, who covers that. remember, newspapers have a cost structure where they're supposed to deliver the news, not just opinion. >> that's been part of the problem with the "post," is it hasn't been able to decide is it a national paper or is it a local paper? >> and by the way -- >> this indicates -- >> they made so many factual -- michael medved, they made so many factual mistakes down through the years they really
undercut their own credibility. i mean, i scan the "post" every day, but they made so many errors. and they're so biased. in that election. it just was off the charts what they did to romney and the republicans. and i know, hugh is right. there are some excellent columnists in there. but they're not all excellent. anyway, general, i've got to go. jeff bezos, going to have a lot of fun if he does this right. mark walsh, it is great to see you. hugh hewitt, wonderful to have you back on the show. and michael medved, ditto. same to having you back. >> thank you. >> now, president obama wants to close down fannie mae and freddie mac. but he seems to be creating new insurance guarantees, maybe pressuring the banks to make more home loans. i thought we did all this disastrously in the past. next up. and then later, where are we now in the irs scandal? where are we? all roads seem to lead to lois lerner, including new evidence that she had some questionable contact with the federal election commission. but have we really completed the
food chain on this scandal? don't forget, folks, free market capitalism is the best path to prosperity, and i believe that jeff bezos is a free market capitalist and he is going to bring change to the "washington post." i'm kudlow. we'll be right back. hey, it's me, progressive insurance. you know, from our 4,000 television commercials. yep, there i am with flo. hoo-hoo! watch it! [chuckles] anyhoo, 3 million people switched to me last year, saving an average of $475. [sigh] it feels good to help people save... with great discounts like safe driver, multicar, and multipolicy. so call me today. you'll be glad you did. cannonbox! [splash!]
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all right. president obama out campaigning once again today, this time touting the housing recovery and pushing for a sort of wind-down of mortgage giants fannie mae and freddie mac. take a listen. >> for too long these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad taxpayers would be left holding the bag. >> all right. i totally agree with what he just said there. that part i totally agree. however, the president's speech it seemed to me had at least one and maybe two new taxpayer-funded government insurance plans. so how does that put an end to fannie and freddie? let's talk to american enterprise institute fellow alex pollack. he's former president of the federal home loan bank of chicago. he's the author of "boom and bust." alex, correct me if i'm wrong.
okay. but according to the news accounts, he wants a federal backstop guarantee of some kind for 30-year mortgages to make sure that paper doesn't go away, and he also wants a kind of fdic guarantee mechanism where private lenders would have to pony up. but you'd have two new insurance plans inside fannie and freddie. now, that doesn't sound like he's getting rid of them to me. >> well, you're right that he wants to get rid of fannie and freddie. and he's right. of course that's hardly a leading position. we've already got two bills, one in the senate and one in the house, to do that. so this looks a little bit like the white house trying to catch up. >> i'm not saying -- that's not what i'm saying. >> i'm with you, larry. >> if you're adding -- if you're adding a new insurance fund overall, like a backstop, and then adding another backstop for 30-year mortgages, to me that doesn't sound like getting rid of fannie and freddie.
in fact, that doesn't sound like anything that's going to attract private capital, which is what i thought they wanted. >> it doesn't sound like getting rid of the government guarantee. you're taking out one form of it and putting in another form of it, just as you say, and hoping you might be able to price this guarantee right, which the government never does, never in any single instance, has it been able to price its guarantees right. >> do you think that -- all right. i saw one of the senior staffers was on cnbc earlier today. do you think the administration and the congress really wants to get rid of fannie and freddie? i think jeb hensarling of the house financial services does with his bill. you know the whole real estate lobbying complex, they don't want to do it. and i don't really hear it from the administration if they're creating new insurance funds. >> well, i think everybody as i said has agreed on fapie and
dprooed and everybody, as the president also said, thinks we ought to have more private capital. but then there's a large group that says wait a minute, we've got to have this government guarantee. how could i do without a government guarantee? and there are a lot of people as you rightly point out who benefit from that guarantee and will try to push for it. >> the thing is also littered throughout the speech, the president says he wants tighter credit standards but he also wants to help people buy homes. it's like here we go again. i thought, you know, virtually no down payment no, documentation, no income, things of that sort. that's where we left this thing. and that's one of the reasons we got in so much trouble. putting aside the fed and interest rates. the rules of the game from the mid to late '90s on gave everybody all the housing they wanted. and i don't think that was a very good idea. >> well, you know, it's the shortness of financial memories that makes for cycles and why we keep on cycling, larry.
>> do you think subprime lending's going to end now because of these so-called reforms, which i don't know will pass the house and senate. do you think subprime lending's going to end, alex? >> no. and it will -- it is already still in existence. lending in general now has a much heavier set of regulatory burdens on it, which has slowed down the recovery. but we do have a natural cyclical recovery on the way. this has brought house prices back to their trend line. if you look at the 60-year history of house prices against inflation, they're almost perfectly correlated. and where we are now is we had of course the 50 years of going on the trend line, the huge bubble, the fall, and where we are now is back to the trend line more or less where we ought to be. and what we don't want to do now
is try to artificially stimulate house prices and credit. >> look, i agree with that. i just want to get the private sector in a much more dominant position. >> yes. >> if you're going to get fannie and freddie, you may restrict them a little bit, maybe restrict what they can own in their portfolios. that would be a good -- a very good idea indeed. but if you're going to give fannie and freddie backstops for 30-year bonds and a general insurance fund that private lenders are supposed to pay into, i don't see how that takes those agencies out. i think those agencies continue and prosper and i'm not saying everything's going to be the same. but it just doesn't sound like the kind of reform. we've got to get jeb hensarling on because he's got a totally different idea. from the house financial services committee. >> he's got some very good ideas about really moving the farthest toward getting a truly private market. i think everybody wants to move that way, but how far can we really get toward what we ought to have? >> get those private mortgage insurers in there.
alex pollock, american enterprise institute, got to get going. thank you very much, sir. now, the trial of the man responsible for one of the worst terrorist attacks on american soil began today. defendant nidal hasan faces the death penalty. we'll have that story and headlines from josh lipton just ahead. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection.
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cnbc's josh lipton joins us with more on that and all the latest breaking headlines coming into the cnbc newsroom. i hope i pronounced it right. >> i'll try, larry. nidal hasan just came out and said it today, telling the jury that he is indeed the man who shot and killed 13 people at fort hood in 2009. the real drama in this trial, though, will come when hasan is given the chance to actually question the victims who survived his attack and then when he is sentenced hasan could get the death penalty. and we're getting more details, larry, now about that southwest airlines crash landing at laguardia airport last month. the national transportation safety board now reports that the captain of that flight took over from the first officer just before that bad landing. it's not clear what the reason for that takeover was, but the report also says no malfunctions or mechanical failures have been found. and former president george w. bush recovering in a dallas hospital after undergoing heart surgery this morning.
doctors discovering a blockage yesterday during bush's annual physical and put in a stent. in the procedure today mr. bush expected to be back home by thursday. and finally, here's more evidence, larry, that electric cars, they still aren't that popular. gm cutting the price of the chevy volt by a whopping 5,000 bucks. it will now list at under 35,000. volt shares felt 3.3% year on year, larry. >> give me natural gas anytime. can i just ask one more sning nidal hasan. this guy still hasn't been classified as a terrorist action, has he? >> sure. right. and that's an interesting part of the argument here. how does that affect the trial and obviously all eyes on two things we discussed. one, getting to question the victims. and two, remember, the ultimate penalty could be the death penalty. >> and he's going to be out there in an open courtroom with a lot of information going back and forth. >> a lot of scrutiny. >> that a lot of bad people might put to bad use. >> sure. >> all right. josh lipton. josh is going to stay with us later on. now, folks, let's face it,
markets still fed and taper obsessed. the dow dropped today on taper fears. i still say the taper is not coming next month, and i think there's no reason to start cutting back on bond buying anytime soon. that's just my view. we're going to get into that debate next up on "kudlow." hero: if you had a chance to go anywhere in the world, but you had to leave right now, would you go? man: 'oh i can't go tonight' woman: 'i can't.' hero : that's what expedia asked me. host: book the flight but you have to go right now. hero: (laughs) and i just go? this is for real right? this is for real? i always said one day i'd go to china, just never thought it'd be today. anncr: we're giving away a trip every day. download the expedia app and your next trip could be on us. expedia, find yours. (announcer) scottrade knows our and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading.
welcome back to "the kudlow report." i'm larry kudlow. in this half hour we have some new revelations in the irs political targeting story. but all the roads still seem to lead to one lois lerner. could it be that she really quarterbacked this entire thing? and 3 million time warner cable subscribers continue to live without their cbs channels. will this nasty blackout fight lead more folks to cut the cable cord? whatsoever. we're not at the inflation target of 2%. we're not at the unemployment target of 7% or 6.5%. so there are no signs in terms of the macro factors that would indicate that the fed should stop easing. >> all right. that was blackstone's vice
president byron wean on cnbc this morning. he's making the case the economy is too soft for the fed to reduce asset purchases. i happen to agree with him at this point. we've got time to wait on that. whatever. stocks fell on comments from chicago fed head charles evans and atlanta fed chief dennis lockhart that tapering should begin in september. so when is it right to be worried about stocks? is it the second half of this year? is that going to be the deal? let's bring in cnbc contributor john rutledge. he is the chief investment strategist for safanad. i hope i got that right. >> safanad. >> josh lipton's going to stay with us. john rutledge, is this a fed-obsessed market? is it going to always be a tapered market? and should people sell on the rallies before the fall? >> i think you sell the bonds and buy the stocks, larry. you know, this is -- everybody's worried about taper. it's reverse taper that's the
real interesting question because once they get done with all this they're going to have to sell $3 trillion of security. that's $250 billion a month for a year, and people haven't wised up to that yet. if they don't do it, we've got an inflation story down the road. so right now i think it's a bond-stock allocation question. >> but john, just a quick follow-up, please. i have not seen you in a while and i want to refresh your position. you basically are saying you've got about three years in front of us, three years. first, stop buying the bonds. and then second, start selling the bonds and let the short-term interest rate go up. you're basically saying, john, you've got three years plus of tighter money. what's that going to do to this whatever, 4 1/2, 5-year bull market in stocks? >> it's not going to help it. partly for the reasons byron talked about, larry, that as we know, old guys that saw the 1970s firsthand, when you get to
the inflation part of that story it pulls down price-earnings multiples. that's seven years off into the future. right now this qe story is like watching a boa constrictor swallow an egg as it moves through. first it brought back the real estate securities market. then it brought back the recovery. then it brought back property prices. then the stock market came back. and so we're going to see that push through into bank loans. when the loans show up, that's when you get deposits and the monetary aggregates increasing, which will bring back gdp story. >> that's your m-2, gdp, inflation story. josh lipton, is the market today, was the market today, but is the market in general fed obsessed? >> well, certainly, listen, larry, given the outside role the fed now plays, the modern central bank plays in our economy, you're right as a trader-investor to pay a lot of attention. i think certainly this week you've seen another kind of round of taper anxiety. yesterday was fisher.
today was evans. who's notable obviously because you descend to think of him as more dovish. >> right. he's the dove and he created the evans rule which is actually governing this whole thing. >> when he comes down and says he's not going to limit the possibility of a september taper, you cover that way june that came in better than expected. i think the bottom line is it was bernanke and company's line, which evan said it's data dependent. i think in september you can see a taper but they'll continue to walk that line, saying listen, maybe we'll cut back stimulus but an outright rate hike they'll say -- >> jack bergeron, cutting back on bond buying and rate hiking is kind of similar. the rates start rising in the longer end of the curve, as they have been, 100 basis points, and you kind of wait for the lower end of the curve. so it sounds like i've got two -- i don't call them bears, but i've got two very cautious people. what's your take? >> over the course of the last year, larry, we have watched large giant asset allocations moving out of fixed income and
into stocks. we have seen a stock market go from about 1,300 in the s&p up to 1,700 just in a year alone and we saw the ten-year go from 1 1/2 up to almost 2 3/4. we have seen what i think is the easy money behind us. i think what we have to do now is be very, very prudent. you know, everyone talks about tapering. tapering is not the same as tightening. let's keep that in mind. i know people are starting to say that. but one of the things that we have to keep in mind, and this is the thing that i guess i really differ with john about, is that i don't see inflation. in fact, if anything, i see disinflationary pressure out there. i look at soybean prices. i look at corn prices. with the exception of energy, with the exception of crude oil, i think everything else out there that i trade as a commodity seems to be under pressure. >> gold dropped -- gold dropped today pretty nicely. >> and if you look at copper down at the lower $3 range, anything under $3 is very disinflationary as far as copper goes, and copper is the most widely used metal as far as the high tech world.
>> those are measures of inflation. they aren't causes of inflation. the only way you'll see inflation by looking at prices is after it happens. what we've got is a quadrupling of the monetary base, a 17x increase in bank reserves that has been blocked by the banks, but banks are beginning to lend again. loans are now above what they were in 2007 and rising. as soon as those loans come out, you see deposits increasing. that's when the fed's going to face the really difficult choice between tightening or selling bonds and leaving their reserves to make increased bond -- >> but i don't mean to interrupt, i want to switch gears in one little second, but there is a group of people that argue that rising interest rates will denote a stronger economy. >> sure. >> and the earnings that go with it. and therefore, you may have corrections on the way but if interest rates go up another couple of hundred of basis points in the next couple of years that can be consistent with the continuation of the
bull market. >> larry, i am fully invested in equities right now for exactly that reason. we've got now money that's broken through the banking system. it is pushing equities prices. it only hurts the multiples and ultimately the valuations after it shows up in inflation down the road. so i think that jack is right there. but for right now there's huge money to be made still in the tail end of the mezzanine, or black market of the lending business, especially in europe. and in the u.s. in stuff is now broken up into the equity markets big-time. >> okay. let's go -- everybody stay put. stay where you are. disney reported earnings after hours that beat wall street forecasts. cnbc's julia boorstin joins us now with those numbers. hello, julia. >> larry, disney shares moving lower after hours. while the media giant's fiscal third quarter earnings of $1.03 beat expectations by two pennies, the big news is the company's announcement that due to "lightning round's"d"the lone
ranger's" disappointing box office performance -- but ceo bob iger said on the earnings call he still believes in the tent pohl film strategy and is optimistic about the studio's movie pipeline. the company stressed its strong growth at the cable networks, espn in particular, and improvement at its parks. despite the negative impact of the timing of easter. with both disneyland and disney world setting records. iger weighed in on the time warner cbs backing effectively backing cbs by saying we feel strongly for the need for broadcasters to be paid another quatly for the value they provide. larry, back to you. >> many thanks to julia boorstin. we're back. josh, what happened to "the lone ranger"? >> you'd have to have johnny depp on. it's a perfect reason to have him on. there was a disappointment
there. you saw revenues across a lot of divisions but studio sales as julia said were disappointing. >> one other thing. the whole espn, which is a huge part of the disney success story, they're going to go through the same battle with the various cable providers as time warner is and cbs. espn will want more costs. then they'll want to pass it along. and the time warners of the world and the cablevisions of the world are going to fight them. this could be a really tough fight. >> listen, you're entering this extraordinarily historic, disruptive period. but listen, as someone -- if you turned off cnbc and espn, i think those are the only two channels that i would actually notice they went off. so truly the powerhouse of disney still. >> still the powerhouse. jack bergeron, buy or sell right now? >> i think we sell. i think we go down about 10%. this is the beginning of the correction we've all been waiting for. we see about 170 s&p points come off. you know what happens? we've seen capitulation, which we've already had. we saw the cash flows come in. and now we've got the confidence
that everybody was hoping we would get. that all signals a near-term top. >> that is a big number, 10%. that is a very big number. john rutledge, i don't think the economy's all that strong. i see a lot of part-time workers. i thought the employment numbers were very, very iffy. in fact, i think the whole economy's still -- i don't know. can't get out of its own way. 2%. big deal. >> 2% and a little bit growing as we go along. but you know what, larry? i am owning and buying more small cap stocks. the reason is because during the credit crunch days those are exactly the companies that were not able to get money from banks. so they have a very high cost of capital. as the loans begin to be released by the banks and credit becomes more available, their cost of capital drops sharply. that's why small caps are up 33% so far in the last year versus 22 for the s&p. >> josh lipton, last word. in your reporting are you hearing people talk about a 10%
correction as jack is saying? because that is a big number. >> sure. listen, that's what makes a market. i think on the other side, though, even those who have become incrementally more positive, i think it comes down to as we were discussing they think the central bankers will remain accommodative. they think the economy -- no one's arguing it's a rocket ship but you'll hear themmin argue o our air they think it's at least on firmer ground. and as jason trager of strate 2k3w67 gus. he has the acronym. tina. >> great to see you. thanks for helping us out. where are we now in the irs political targeting investigation? lois lerner still hiding behind the fifth amendment, even as more evidence seems to say that she was the quarterback in the plan. not only for the irs but maybe also the federal election commission. but then again, what about the chief counsel's office? we're going to get an update
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fec, don mcgann, says e-mails from his staff to the irs raise serious questions about collusion in the targeting of conservative groups that may also be illegal. what's the irs chief counsel's office doing? william wilkins. is he completely off the hook? too many people in the media are buying into the idea from the president that this is a phony scandal. i do not think it's over. let's go to jay sekulow. he is the chief counsel with the american center for law and justice. as always, jay, i just -- i don't think this is near over. but you tell me. you follow it more closely. >> well, it's not. the latest revelation as you mexed you've got f.e.c. involvement. f.e.c. in coordination, in consultation with the irs, the e-mails are to lois lerner. lois lerner responds back. taxpayer information evidently shared, which is a crime. the government, the irs cannot do that. now we have a better understanding why lois lerner took the fifth amendment, by the
way. and while at the same time it was the attorney general eric holder who said this may well be criminal. opened up a criminal organization. well, the government filed a motion for extension of time in our lawsuit. not a surprise in a case as significant as this. in that motion, though, the government said there is an ongoing criminal investigation. and if in fact, as it looks from these e-mails, that lois lerner was giving information to the f.e.c., the federal election commission, targeting a conservative group, that in and of itself is criminal conduct. no wonder she took the fifth amendment. >> that's illegal. >> absolutely. >> jay, let me just ask you. your quote, the fbi pursuing a criminal investigation, is that a new quote? is that something that's just come out? i've not heard this before. >> they just filed their motion -- yeah. they just filed their motion for extending time in which to respond to our lawsuit, and in it they talked about the ongoing criminal investigation by the fbi that we just got the other day. we just are now consenting.
normally you consent to the filing of these extensions. but larry, they put it in there. they said this is ongoing criminal investigations, we need time to engage this and decide who needs -- i'll tell you something else that's new. they're acknowledging, the government, that the individuals that have been sued may need in addition to department of justice lawyers, they may need their own independent counsel representing them, which tells you something else, that this is very deep. >> not being an attorney, but lois lerner giving information to the federal election committee is illegal, is it not? what is she doing? this stuff's not out there. >> absolutely. it's illegal for two reasons. number one, the internal revenue code says you can't share information with the f.e.c. that's number one. it's private taxpayer information. number two, the f.e.c. never authorized an investigation. and the f.e.c. cannot do an investigation unless it is authorized. and the f.e.c. did not authorize this investigation. so there's multiple serious civil and criminal liability here. and in the opening you mentioned
the fact that the irs chief counsel has now been implicated. his office certainly has. and that was based on the testimony of carter hall, who's a defendant in our lawsuit. he's the irs lawyer in washington that was involved on behalf of the irs. he said chief counsel's office took these cases over, the ones that he was involved in, and that, by the way, was the template upon which all these unbelievably absurd and intrusive questions came. and larry, you mentioned early on about stephanie cutter. there was also a meeting between the irs chief counsel and the white house, including the president but also people on his staff and three days later we get the new series of inappropriate questions. >> right. she was in that meeting. campaign operative was in that meeting. let me just go back to william wilkins in a second. when will he be deposed by darrell issa's committee? someone's got to put the heat on this guy. >> we're going to question him this week -- >> somebody's got to put him under oath. >> correct. and it's three very simple questions. it's what did you know, when did
you know it, and what did you do about it? and it has to be under oath. that's in process now. they're in recess. i suspect that's going to take place in september. but there's absolutely no excuse for the irs chief counsel to not testify he's been implicated. as has his office. and he has to respond. he is an appointee of the president of the united states, which raises of course, it's gone up the ladder another couple of steps. >> all right. what i hear from jay and what i read, this is no phony scandal. or at least it's way too soon to make that judgment. jay sekulow, thank you for your update. as always, we appreciate it. now, folks, we're in day five of the time warner cbs network blackout. will this ugly battle only speed the end of the cable distribution model? what are the other options out there for viewers? we have that story next up on "kudlow." [ male announcer ] come to the lexus
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a new survey from mccrary capital shows that cable television could be on thin ice. an overwhelming 75% of people said traditional tv would be the first service they would cut out of their budget. so with cbs and time warner still fighting it out, will cable tv as we know it come to an end and will people cut the cord? here now is digital media consultant john fine. and joining us on the phone is media and technology analyst btig, our old friend richard greenfield. john fine, let me go to you. cbs wants more money for time warner to carry their content. who's going to win this?
>> well, the consumer's going to lose because eventually the consumer's going to pay higher prices. i mean, this is -- this is showmanship. there's a legitimate beef here. cbs wants essentially to double the fees they're getting per subscriber from time warner cable. they're not going to get that. they're going to get something because you know, in several months football starts and basically, you know, everyone's going to completely freak out if they're not going to be able to get that on cbs through time warner. but what's really happening here, it's not the end of cable tv because the one thing people don't cut is broadband internet. who do you get broadband internet from? the cable companies. now, for a cable company what's more profitable? their broadband offering. so when you see people like john malone, you know, very smart guy, very tough guy running liberty media, talking about rolling up companies to get the broadband, that's a pretty good show of what's going on here. they may not hold on to the tv package forever. but you know, that may not be the end of the world for them because they've got something very powerful to offer besides. >> rich greenfield, welcome back.
do you agree with that? that poll from mccrary, you've got cable, you've got internet, you've got wireless. the first one to go is the tv. the wireless stays. the internet stays. that's where you can do your tv watching and so forth. where is this going to lead? where is this going to end? is the cable business model coming to an end, rich greenfield? >> you know, larry, we've done polls like that in the past, and what's interesting is when you ask people would you cut the cord and they go sure. and then you go would you really cut the cord or where would you go, what would you do? they say i wouldn't actually cut the cord because my wife or my girlfriend or my kids love it, i would personally but it would be very hard in my family circumstance to cut the cord. so remember, the average household still watches five hours of television a day. so i think there is a little bit of a knee-jerk, especially when you get in these ugly battles between companies, of hey, i'll just cut the cord. you know, over the last couple of years multichannel viewers are really fitting right about 100 million, meaning people
paying for cable, satellite, or for an arboc meaning someone like a verizon, fios or at&t u-verse. it's certainly going to start chafing at the edges. you're going to see people starting to choose new alternatives. but i think what this batsale really about is cbs, which is a free over the air broadcaster that's supposed to operate in the public interest, they want to take that same free over the air signal and they would like $2 per sub per month. if they get it every other broadcaster, meaning abc, nbc, fox, they're all going to want it too. >> don't they deserve to get it? it's their content. why shouldn't they get it? they've been giving it away for free for all these years. you and i have been talking about this. >> because now someone is willing to pay for it. they've established a thing for it. and people aren't going to live without it. people aren't going to just walk away. rich brings up an excellent point. you can talk about cutting the cord. we all know one or two people who've cut the cord. it is such an enormous pain to cut the cord. and there's stuff you that can't get if you cut the cord.
okay, so i'm going to miss out on some ports but i can go to a bar and maybe i'll go know friend's house. oy. please. it's worth it. this ludicrous check i write every month to a company i don't even like so i don't have to deal with that. that's very powerful. >> but larry, the thing i think you have to keep in mind is remember, espn charges over $5 a month. they're a cable network. they are not a broadcaster. espn does not make their content available with an antenna to anybody in the country. they don't operate in the public interest. and they don't put all of their content online for free. you have to subscribe to a multichannel operator like a time warner cable to get it. that is very, very different. this dramatic distinction that gets lost in all of the rhetoric that you hear, espn is not the same as cbs or nbc. and if cbs wants to be paid like espn, they should become a cable network and not be a broadcaster. but they want to have their cake and eat it too. >> they periodically threaten to do just that. i mean, they --
>> last 15 seconds, jon fine. when does -- when do they make an agreement? the football season's coming up. when do they make an agreement? >> they make an agreement just before football season. you don't even like football. so they can fight all winter for all i care. >> six more seconds. the boutique model. can you pick and choose? real fast. >> badly, yes. >> i've got to get out of here. jon fine, rich greenfield, you guys are great. i'm kudlow. we'll be back tomorrow night. ♪
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