tonight on "the kudlow report" with jobs down, defensive stocks trump cyclicals today. is it time to stop the minimum wage hike now? governor sarah palin reenergizes conservatism, and russia is nowhere equal to the u.s. we must not appease them. fasten your seat belts, everyone. "the kudlow report" begins now. good evening. i'm larry kudlow. welcome back to "the kudlow report," where we believe free market capitalism is the best path to prosperity. welcome back from the july 4th holiday weekend. let's never forget life, liberty

and the pursuit of happiness. a/k/a american freedom. topic one. the u.s./russia reset. i don't know why the u.s. should make any concessions on defense or democracy or freedom to a country like russia, nowhere near an equal to the u.s. later in the program, steve cohen and frank gaffney, two distinguished experts will be bait a debate all of this and we'll talk about the russian oil story and talks. meanwhile, topic a-1 tonight, joe biden's acknowledgment that team oma misread the pr economy d the risg unemployment rate. take a listen to this. >> the truth is, the was a misreading of just how bad an econy we inherited. now, that -- i'm n lying -- it's now our responsibilit so the second question becomes did the econom package we put in me

place, inclung the recovery e act, is the right package given the circumstances we're in? and we believe it is the right package. >> all right. i don't think it's the right package, but here is the key point. even an optimist like myself has to acknowledge the big drop in june jobs for both payrolls and households tells a bad story and postpones recovery. there isn't going to be a real recovery until jobs start rising. it's the most important coincidence economic indicator. and even while leading indicators from fed money creation and financial improvements and credit market spreads, along with the rising stock markets since early march and a pickup in commodities, though not today on commodities, all those are flashing go for future growth. but now perhaps that real growth may not come until the end of the year. here's a big problem. wages have flattened and private hours worked keep declining. and the administration's $800 billion fiscal stimulus package

has to stimulate what mr. biden misread was a solution to the economy. tax rates should have been slashed across the board to individuals, businesses, and investors, and instead of fiscal nymphomania, we need incentives and rewards for job creation. we do not need nationalized health care or nationalized energy, nor do we need a hike in the minimum wage which incredibly, is due on july 24. why should business create new jobs with all of these high tax and regulatory threats in the air? we'll debate later in the program with keith boykin and steve moore on these topics. we're going to look at this on a day when the indices gained slightly. they rotated towards defensive shares. that's a very important shift, and that may be a harbinger of

what is to go. we have mario gabelli, chairman of gabelli funds. richard cla of pimco, and also a professor of economics at columbia university. phil orlando, and steve moore, co-author of "the end of prosperity." mario gabelli, i want to start with you. today is a day the indices come up. dow up plus 44, s & p plus 2, and nasdaq down slightly. it was consumer staples that led the way, utilities and financials, even a banker can make money in a sleepily upward sloping yield curve. energy, consumers, tech, and indid i discretionals. nonrecovery stocks led the way. the defensive stocks is that a way that we'll see for the remainder of the year?

>> the markets flat to up to 5%. >> from here? >> no, here probably slightly up. buying general mills. they had terrific numbers anyway. the stock up a couple of dollars today. gis, and you had sector rotation, but the stock still down 10%. >> so it's cheap? >> pretty interesting company over the next three to five years, because it plays into our health and wellness theme. >> not tied to economic growth particularly, is that right? >> well, do you have a concern over channel shift. where do i buy my cereal? do i buy it in the big box at costco, save from the supermarket and do you buy a private label. >> price sensitive. but it's not industrials, metals, industrials, commodities? >> you covered a lot. >> this i the first time i've seen such clarity in the

rotation and i like the fact that the stock market was up. >> but you also had money made in what i call financial engineering. okay, emc bumped the bid to data domain to 34.50. you had some recovery in emulex. you had some other companies that are part of a transaction. how do we allow capital to flow towards its highest return? companies have to do spinoffs. you will see a lot of financial engineering through the balance of the summer. >> all right. let's hold on for one econd. bill orlando, let's go to you. i'm interested. i won't say i like. i want things to turn out well and american investors to create wealth. that's my basic point. i have to be realistic. i looked at the jobs number and saw nothing good, everything bad. so i'm thinking now the only hope i have left for a summer rally is in defensive type stock, including consumer staps and general lls type stuff that marioabelli just mentiod. what's your take?

>>ur models are suggesting that t staes and health car stockstwo defensive areas, certainlyttractive here that i tnk the headline miss and the jobs report on thursday put thfear of god into investors that the strength of recovery in the second quarter earnings season will not be up to snuff. so the defensive categories to a lot of investors look attractive right now. we were concerned about the jobs report too on thursday, but when we dug into the in buildings, the one thing that jumped out at us is a significant miss was a loss of 52,000 jobs out of the government, related to their census bureau hiring. the government has been adding 50,000 or 60,000 jobs permonth, trying to build to 1.4 million total workers in this area some of very much a surprise that they eliminated 5,000 jobs when they are supposed to be adding 50,000 or 60,000. >> government jobs don't count. they aren't permanent job. let's bring in steve moore and talk about this.

businesses and professional services were down. that one shocked me. household employment is one of these contrary turning point indicators that down 811,000 jobs. i don't want to repeat last week's news. what i want you to comment on is joe biden. they misdiagnosed the economy. did they misdiagnose the solution to the economy? >> when he started the statement by saying the truth is, you know he is probably going to lie. that's what politicians often do. and if you look at the numbers that the obama administration was talking about back in january, they were forecasting economic growth. remember, their budget, way higher than the blue chip. that was one of my complaints about their budget, was the deficit over the next ten years was going to be about $13 trillion, not $9 trillion if you use realistic numbers and the three months up to the election, larry, obama said it's the end of the world, in a financial crisis that's going to last for years. they keep changing their story and the most important point

about this is, larry, they are not changing the program. >> right. >> even though the program is wrong, you know, the other big story this weekend, larry, i listened to a lot of democratic house and senate members who said maybe we need another stimulus. and then we're talking about the kind of stimulus you and i talk about. they are talking about more government make work spending programs. >> richard from pimco, wonderful to have you back on the program. love having you. this is one of the rare moments where i agree with joe biden on the diagnosis of the economy. it is not what i hoped it would be. we planted the mustard seeds, okay? you can see it in the money supply growth, in the improved financial markets. credit spreads have come way down. a little bump up in commodities and the stack market rally, but for the life of me, i cannot see the recovery. i want to see clarity, and you are the person to give us clarity. >> i think what we've done is

moved beyond the nightmare sewn aroff another great depression and financial meltdown, so you've had a relief rally. but from here, i agree with your other guests. it's tough sledding. i don't think the fiscal package is going to be effective. i don't think the multipliers will be there. we're in an environment where we have deleveraging, deglobalization, real concern about trade and real regulation. not a healthy environment for growth. i think eventually we'll get positive gdp prints. >> when? when are those prints coming? the positive gdp? i postponed mine. what are you thinking for yourself? >> you can get a technical rebound with inventories in q3 or q4. the next year and a half or longer is sluggish growth. the consensus is for a weak recovery, 2% growth. we could have a new normal where we have to accept 2% growth. which i'm not happy with.

>> abnormal for america. terrible for america. >> 2.5% growth. >> he didn't say 2.5%, he said 2%. 3.5% in 20 years. >> 2.5% for developing countries, that's not bad on a global basis. >> are you settling for second, maybe third best. you sound luke a defeatest from western europe. i can't believe that from a great american like yourself. 2% sr. >> 1% population growth. productivity gains and nice profits in the stokt market with that. you're talking jobs, growth. i'm talking making money in the stock market. because you have -- the strongest struggle, larry. as capital is removed from an industry, those that have remaining capital will earn an above-average return before new capital comes. an example, the auto retailers, car sales are down to a 9.7

million seasonably adjusted rate from 15 million. but autonation stock i think will do quite well, because they have the capital to find the next location. >> would you buy ford? i'm just throwing that in? >> i'm giving you what i'm buying. i'm buying o'reilo'reily, compa that make parts. car production in the third quarter will about 2.2 million. 2.4 million in the fourth and you will still have an inventory without rebuilding inventory in the pipeline. >> give me one more. >> i like companies similar to -- i'll give you a really interesting one. in las vegas. an oppressed market. >> steve moore and i are going there next weekend. i don't know. we're out of our minds, but we're going to freedom fest. go ahead, please continue. >> steve wynn operates the

place. the quality player like you will get back into the market and he is maintaining quality service. those are the kinds of companies i'm looking for. >> bill orlando, give ussome thoughts. u heard the great mario galli. where are you investing, il? >> we like domestic small cap stocks in the u.s. think we are setting up in the eay stages of a dollar vs. euro valley over trally over th this year. >> that dollar rally -- i don't mean to interrupt. that is part and parcel ofthe delayed boomf this scenar, is itnot? >> we absolutely believe based upon the relative aggressiveness of our central bank vs. the b, we think we're looking at stronger gdp recovery in the u.s., both this year and next, versus the eurozone. we don't think that americans recognize that just yet.

>> what stocks inside the dollar wod you buy? >> we like domestic small cap, erging markets. technology, the two defensive areas we talked about, hlth care and consumer staples. we like consumer discretionary. we think retail may actually come back in the second half of this year. >> rich, what about bonds? what about bonds? i want to ask you three. government bonds, corporate bonds and mortgage-backed bonds? >> absolutely. still opportunities in mortgages. fannie mae, freddie mac, obviously have had their challenges, but those securities still represent good value with investment grade credit. you have to do it by an individual name basis. a big cop pregnancy in spreads along with the equity rally. still opportunities there. government bonds, look, it's a tug of war. the huge increase in treasury supply. 2 trillion this year. >> fiscal nymphomania. >> tough sledding for long-term

government bonds over the next several years. >> there have you it. rich, mario, steve, phil. thank you. we'll debate taxes and hiking the minimum wage what a great idea! in a down turn, let's hike the minimum wage. one of the stupidest things i ever heard coming out washington. coming up, obama heads east to wheel and deal with russia's putin puppet, medvedev. is he letting russia command too much respect? is russiaowhere equal to the u.s.? we'll have two of the best foreign policy gurus to debate. stay right here with "the kudlow report" go defensive on stocks. there is money to be made, but you have to take the reality that the recovery will be delayed.

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all right. now here to talk about the russian oil part of the obama/medvedev summit meeting and its impact on stocks, we have pulitz-prize winning or of he prize" daniel

yergin and we have john killduff of mf global. volatility is the big phrase you hear around wall street on oil. i don't know if it has a thing to do with this summit meeting. but going from roughly 30 to 70, fell off 3 or 4 bucks today. is there any, your judgment, oil impact coming out of this medvedev/obama summit meeting? >> in one word, no. the only impact is indirect in that the main subject that's obviously not being talked about up front is all about iran. >> what would you expect? that's an interesting topic. we need russian help and not getting. they are helping to rebuild nuclear facilities and military facilities. what do you expect? any thought on that? >> it's a dialog from the russian side to understand that the u.s. is really serious about this, and there probably is a

time clock ticking here, and to try and build some relationships so that there is a framework for dialog about it and understanding how serious the u.s. and europeans are about it. >> it's interting t me about it. i'll get to john in just one nanosecond. one of the main meccas in iran have come out and said the whole election is a fraud. and thereby disagreeing with the headahmullah. >> they really have to try and turn the country toward a totalitarian country because of the depth of opposition that's there and the other thing that it means larry is the question of more strict economic sanctions which is clearly part of the dialog in moscow will

loom larger because it means increasing economic pressure within iran. >> john killduff, traveling with president obama, according to reports, a couple of businesses, deere, boeing, and pepsi, i was interested to read an account this afternoon, exxonmobil, chevron, conoco phillips and alcoa, they are traveling with the oil guys too. are there openings here? does this have impact on stocks? will the russians reliably allow our producers, our explorers and our service companies to do business in russ, which really doesn't have any rule of law, but, whatever you tell me. >> that i the big question, rry. ronald reaganroke down t wall and reengaged russia wit the we. can obama do that? maybe it's naive to think he can, but if he can, have there is absoluly a fierce amount of opportity for those compan you just mentioned. huge lng natural gas projects. huge transport ises, huge

infrastructure that ne to be built out to get where russia wants to be. to be the number one producer of oil and natural emphasis in the world. bigger than saudi arabia. >> who benefits from that, john? >> i would say we all do, larry. >> which companies. >> oh, the ones you mentioned. exxonmobil, conoco phillips, chevron. >> what about the servicing companies? >> absolutely. halliburton, chamberge, they all stand to benefit. >> the reason the energy secretary was supposed to travel in the russian energy minister, the problem i just came back from russia is that there is not clear what an energy dialog would be, what the framework would be. but i want to say one thing, larry. and the russians, i can see the difference now from when i was

there a year ago. the russians learned they are part of the global economy and they thought that they were decoupled from what happened in the u.s. and they realized they are in the boat of the global economy. that's a different perspective. >> how much -- what kind of oil prices does russia need to stay out of bankruptcy? >> they would probably like to see anything above $60, $70. in that range. the great mention or the great consensus has kind of settled on oil prices. >> is it fair to say they are in cahoots from opec. i hear the same kind of thing from opec, $75? >> that's a number floating around. the russians send large delegations to opec meetings, but they are not a member of opec, but they are rooting for opec. >> $75 per barrel oil this is kind of craze ooechl gasoline at retail has gone from $1.60 to $2.60. $75 oil is not going to bri gas prices lower. is this a mini oil shock?

>> i would say the problem that russia will have down t road if they are to expando the degr that they will expand is they are gng to hav to cooperate no opec to rein in production. >> dan, will the russians let american companies, oil service companies, whatever, keep profits? or will they interfere? >> they will up to -- exxonmobil is producing up to a couple hundred thousand barrels aay in partnerip with russian companies. coming up, steve cohen and richard gaffney will join us to talk about the bigger picture. is the united states sacrificing some principles to appease russia? we'll hear from two of the best in the business. and the palin movement is alive and well, and i believe it's time for conservatives to

join me in support of governor palin's power to reenergize conservativism and republicanism. she can do it. that's why she attracts so much criticism. she can do it. you're watching"the kudlow report." we can do it too. just give us ahance.

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and medvedev. you can see the clips of the two gentlemen walking in. held aoint press nference. control and many othe things were discussed. we have steve cohen back. nyu professor of russian studies and author of "soviet fake and lost alternatives." and frank gaffney, secretary of defense under president reagan and president at the center for security policy. thaw for coming back on. i'm concerned that the united states going to make too many concessions a country, russia, thatis not evenear r equal, steve. >> there's about 500 peop in moow that are telling medvedev and pun, don't ke any coessions to the united states, do not appease them. because gorbachev, yelyeltsin, the early putin gave to the

united states. >> the other side is telling their leaders exactly the same thing, we are apprising here in the program. but what about freedom and american interests? what about expanding nato to include georgia and the eau ruk. what about asking for help to stop nuclear development in iran. what about protecting the democracy, perhaps even in russia itself? >> look, just because there are chauvinistic russians playing to the aspiration of not only putin, but many other russians to re-establish something akin to a great russia doesn't alter the underlying reality that you spoke to. they are not great russia they are not going to be great russia. they are not our peer in any sense of the word, other than the fact for the moment they still have a large arsenal of nuclear weapons they are in the process of having to dismantle,

eliminate. they are modernizing some of them, but unable to afford all of them, and it's the throwback to the old cold war model that i find most troubling about this, larry, that it's comfortable. steve and others like him have -- have a well-honed track there. but the reality is the world is not what it was 25 years ago when barack obama was saying hey, we have to rid the planet of nuclear weapons and we need to do it by doing deals with the russians. >> it does bother me. russia has rolled back a lot of freedoms. in business, they have rolled back the rule oflaw, thr ceos and oligarchs into jail why do we believe them? >> much of the trade and investment in russia have gone to the europeans.

>> why do you think that russia pulled its application to the world trade organization? because china is the wto. it ain't perfect and i don't want to defend their transgressionsbut at least they are part of the process. russia doesn't want t be part of t trade process. why is that? becauseheyare following recovery policies from the economic cres. they need to protect their industries, their poultry industry, automobile industry, pharmaceutical indtry, have virtually been wiped out by fr trade. e othething is they want to form separate bilateral relationships with the other soviet republics. >> the separate realities or alliances what does that mean to the baltics, to the ukraine, to georgia? >> i was only able to hear part of the previous segment. but one of the things that's unmistakable is that the europeans have made themselves

dependent on russia for energy and so, yes there, is now a mutt ality of interest that's begun to develop in the sense that russians find it expedient to do business with the people who are now -- let's be honest, suppo supplicants. just watch any winter when the russians cutoff the ga supply. when ronald reagan said he was going to stand in the way and stop sibern gas pipeline, it was precisely for this reason. just as en, today it doesn't make sense for our allies to be cozying up to people who are increasingly exhibiting the kind of behavior you have described, larry. not good for them, not good for us. >> there's a ray of sunlight in here someplace with respect to afghanistan. the russians are letting us use some space in afghanistan. that's a good thing. is it possible, your judgment, with all of the real politics that you describe and write

about, is it possible they might help us with iran? i still think iran is the biest issue rightnow. >> the problem there is, and i don't want to depress you, but every timee have an analysis if we want this, and we have our interests and why don't they help us? but in the case of iran, it's a classic case where you have to see the world through their eyes. iran is a neighboring country. russia has 25 million islamic citizens of its own, very grateful to iran for not agating anti russian sentiment among islamic citizens. they have a lot of vested interests. they don't have an atomic, nuclear iran, but they have other interests and it will take a lot of bargaining to get them to do more than they are doing now. >> i appreciate that. >> this is not good news. >> frank, i want to guf you the last word. are you concerned that president obama will go too far, lean

backward too much with the russian relationship? you were critical of president goreorge w. bush? >> i think president obama has gone too far already and we haven't seen what he's willing to do to constrict our missile defenses which is insane in a world where re ballistic missiles are proliferating by the day, some with the help from the russians. >> thank you very much. good luck on the new book. coming up, our big question with jobs falling, isn't it time to slash taxes and stop the minimum wage hike? july 24th, a minimum wage hike increase as scheduled. you can think of anything dumber in this lousy job environment? steve moore will debate keith bicycle boykin. are you watching "the kudlow report."

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all right. tonight's big question on "the kudlow report", with jobs falling and recession lingering, is it time to cut taxes and stop the minimum wage hike scheduled fojuly 24th? in a debate, we have former

clinton aide steve boykin and richard moore back for more. you saw the numbs. why would you raising the mim wage? let's arwith that even before we go to taxes? this has been in the works for several years now, larry this is a congressional initiative psed in 2007. bunesses have had two years to prepare for this. granted,hey didn't know that we would bein the middlef a recession whenhis happened. the rty, this may stimulate the economy by ireasing worker productivity, may actually increase job retention and according to economic policy institute, may create 5$5.5 billion in new revenue. >> no doubt they would make that claim if it costs more to hire, these are to some extent subskilled workers. if it costs more to hire, won't they hire less? >> is he right that this was done about two years ago back

in may 2007. ith, y know what the unemployment rate was bac then? 4.5%less than half of what it is today. my view on the minimum wage, larry, when you have got low unemployment rate, businesses are hiring, i don't have a big objection to raising the minimum wage. but it makes no sense, zero sense to wage the minimum wage at times when americans are losing their jobs and businesses don't have the profit margin. this will cause a big increase in the employment rate and one other point about this. keith is also right, businesses have had a lot of time to adapt. one of the reasons that the black unemployment -- blk teenage unemployment rate went up to 35%, a l of firms are not hiring this summer, because they know this minim wage is coming in t or three weeks. >> oh, steve. that's outrageous. that's not true. the reasonwhy thelack unemployment rate is so high is cause there are no jobs in the black community. i live in harlem, i can see th

on my o every day. the reality is, loo have yo 21 states have thaw hathat havee that's $7.2 orhigher. most of the stes in the south, so in the midwest will ve to ke the adaptation. the reality is you can't live off $15,000 a year. >> hold on. >> it's still a very difficult challenge. let me say, it's not just minorities affecting by this. "the wall street journal" featured a 48-year-old car wash worker making $6.55 an hour, and he'sstruggling to pay his rent. these are real peopl affected this. >> keithhois somebody going to pay for rt if they don't have a job? is thiis a point aot of advocas don't understand. some workers do g a pay

increase. others lose their jobs, and they are ch more pro to lose jobs when they have a 9.5% unemployment rate. my solution is very simple. suspend the minimum wage increase for another year or two until we get the economy humming again. >> i would add, let's suspend the hike in the minimum wage. you should have a general holiday for employment taxes on businesses. right now. i would suspend the payroll tax rate, keith. we want to do whatever we can to make it easy and cheap for businesses to hire new workers so why not lower the tax price of hiring new workers and low every the minimum wage of ng new workers, keith. >> i'm noture i'm opposo that ea to be honest with yo bu that doesn't tak away the necessity of raisi the mimum wage. those are two sarate arments, and t reality also isn't addssed here, for a lot of peopl struggling to pay bills and thei mortgages, this increase might actually help them by keeping them --

>> they never get it, my friend. the problem is they may be laid off instead ofever getting it. isn't that an issue? >> the point that ste is making is thate's assuming all these people will le their jobs. if y look at new jersey and pennsylvania they had one state that incread the minimum wage and the other didn't and there wasn't a heck of lotf difference in term of the outcome. >> ith, i had bet you, you're right. ther are 21 states that ha a hier minimum wage th the national avege. i had bet you, i will report to you tomorrow, those states have a l higher unemploymentates than the states that don't. states like california, new york, and new jersey. >> i have to leave it there. we had tremendous ununanimous imity in solving these problems. coming up, time for sarah palin to take her show on the road. i'm out of the cset. i support her move 100% resigning as alaska governor. it's time for her to step out

and take on the obama recession and reenergize conservatism. let's check in with dennis kneale and see what he's working on. >> the recession is over, job losses, to the heck of them. we have the silliness of a stim pack. >> how you can ignore the job losses? the jobs are going south, not north, my friend. >> in january, february, we were losing 600,000, 700,000 jobs this came in higher than expected with 467,000. and the latest ism numbers say it could go down to 300,000. >> when will it go up to 0,000? >> probably 2010. >> "the kudlow report" will return aft this brief message. [ quee] want your longwear to givyou more?

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and about lipitor. as i said earlier, i'm coming out in favor of alaska governor sarah palin's move over the weekend. time to get out of alaskan politics. she's outgrown small town, ankle biting politics. time to take her show on the road. the power to reenergize conservatism, and even

republicanism, if such a thing is possible. she's got charisma, raw political appeal. that's why everyone is attacking her, because they are afraid of her and that's why i totally support her recent moves. come on, sarah. take on president obama, his recession, his fiscal profligacy, a let's include drill, il drill joining me t have a chat about this. i don't think he's in full agreement, my great pal. nationally syndicated columnist. many other skills. i got to tell you, may not have been the perfect speech, but they gave it from the heart. get out of alaska. she can reenergize this moribund american republicanism and conservatism. e's the only e that can do it. >> i disagree with you, maybe fore first time ever. i have trouble saying leader and

quitter in the same sentence. the best thing she can do to be president in the united states is remain in place as governor of alaska from that position, she can create the model government, she can reduce taxes, reduce spending, she can make that a laboratory for school choice. >> she's done that, deroy. >> she has done as much as she can do. in fairness -- these people are so small town. small minded. >> she should be the model governor of the united states. >> who cares about being governor of alaska anyway? all they are doing is hoisting with frivolous lawsuits. she is the one who passed a great ethics reform bill and all they are doing is nitpicking and ankle biting her to death. >> they will do that anyway. >> she did the spending cuts, the gas cuts, the pipeline, she is for drill, drill, drill. she can go to literally a couple hundred congressional districts.

i will put aside running for president. i have no idea. she can revive a real conservative message. she wants free enterprise, she wants fiscal restraint, she wants to drill, drill, drill. a strong national defense. pro life on the social values issues. in other words, who is out there that can -- she can draw 20,000 people, deroy. nobody in the republican party can get 200 people. >> i have no problem with her doing that sort of thing. many people who are sitting governors who engage in national politics. she can do that as sitting governor of alaska and say, for example, in my state we just did this, or i'm about to propose an idea to achieve a incentives for job creation or something like that she can come up with brand new ideas, and she can say we can accomplish this in alaska. >> all of these nitpickers and by the way, i'm talking about republicans in alaska as well as

democrats, they will leakoliticm politico.com, this woman is darned if she does, darned if she doesn't. she can do a reagan. he was out of office when he ran. >> but reagan -- reagan finished two terms in sacramento, did a great job as governor. he wasn't a quitter, and after two terms, he ran for president and won. it betrays the trust the people in alaska put in her. >> i think she's leaving a lower call to go for a higher calling. get your pencils and pens ready, eenve even erasers. go sarah, that's all i'll say. stick to your guns, reve conservatism and free maet economics. ♪ on thisndless ocean

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all right. more on stocks. we turn to one of the hottest hands on wall street, mark travis, ceo of intrepid capital. he has handily outperformed the s & p for the past three years. let's go right to it. we've covered the macro scene. have you a bunch of boring companies. boaring can be really great investments. give us a handful. >> well, larry, i've always looked over the last 15 years for things that people need and use that trade at a discount to what we estimate their private

market value. so regardless of market environment or regardless of what the central planners may be doing in washington, we're always on the outlook for opportunities where there's a mispricing and in light of all of the political hullabaloo, there is a lot of opportunities for mispricing. i look at myself as a repo guy. when people want to puke it up, so to speak, i'm there to help them with their problems. >> have you some interesting picks there. he hein kin, prheineken, prestige chemed, numont mining. >> that is my helicopter been played, larry. i think that the budget deficit of 13% gnd, i'm sure it will go

up. estimates of growth are too high. so, you know, i feel like with the reserves that numont has in the ground, we are in essence buying gold for half price. >> the ultimate defensive play. 54% in stocks, 31% in bonds. 13% in cash and t-bills and you have some other floating debt. do you reckon you'll go longer in stocks, mark, or not? >> we've seen a backup in prices and the smaller cap shares, certainly volatility we take advantage of, so i'm constantly looking for opportunity, larry. >> all right, buddy. thank you very much. we appreciate it. mark travis, intrepid. coming up, kudlow in the news. and even in the blogosphere. and tomorrow morning, catch me "the call" and a few things to say about the blogosphere comments about my views.

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economy xhexaminer. he agrees with me, saying that the june jobs report is worry some. i want to see defensive stocks, not economic cyclical stocks. the voice blog cites my reference to the upward sloping yield curve as the real bailout for theba banking system. thank you, sirs. even a banker can make money borrowing at zero and lending at 6% and that's why i think bank profits will surprise on the upside and so will bank stocks, the upward curve plchl john p. jansen at i-stock analyst, he, meaning himself, rarely agrees with larry kudlow. but he has a grt line as he refers to our fiscal transgressions fiscal nymphomania. thank you, mr. jans. but i don'know why you rarely agre wh me i'm really very sens a