And then, pope francis continues to speak out about economic injustice and income equality. Does this mean the holy father is anticapitalist and antifree market or is he just trying to give business a true social content . All of those stories and more coming up live on the kudlow report beginning right now. Good evening, everyone. This is the kudlow report live and im larry kudlow. This evening, president obama finally fighting back after the slap in the face from russia which is giving a likely criminal, edward snowden, a year to hide. I say, good for you, mr. President. Nbc news Steve Handelsman joins us live now with all of the details. Good evening, steve. Larry, good evening to you. One reason to have held this summit is to talk about fighting terrorists. The United States and russia sometimes have done some of that together. I think before and after the Boston Marathon bombing. But there were other problems and the snowden case clearly tipped the balance. Before he made public his decision to cancel, president obama in california was on the tonight show with jay leno and complained that the too often russia and putin have a cold war mind set. What i say to president putin, thats the past. And weve got to think about the future. Criticism of the nsa, meanwhile, the peak with snowden in russia has subsided a bit with the revelation that the u. S. Government intercepted top Al Qaeda Leaders talking about a plan or at least their hope for some kind of a terrorist attack probably this week, probably in yemen. At Camp Pendleton today, the marine base in california, president obama told marines, we, meaning americans, dont get terrorized. I want to take special time out to salute all our brave diplomats and tireless intelligence and military personnel. Quick update on whats going on out there. Yemen claim it is broke up a plot that says it would have had al qaeda take over one or more of the petroleum and fishing ports manned by foreigners. If its true, it would have been a scary attack. President obama has stepped up drone attacks in yemen to try to keep al qaeda off balance. Larry, they would have discussed this had there been a summit next month between president obama and putin. But its put off. Some lawmakers like you here on the hill thinks its a great idea. John boehner thinks its bad. He charged president obamas plan to restart relations with russia have now collapsed. Larry, back to you. Well, sorry to hear that, Steve Handelsman, thank you very much. We appreciate. It. So we saw Hillary Clinton restart the button with russias prime minister. We saw the president was making fun of romneys concerns about hostilities from russia. Now listen to this. The 1980s are now calling for their Foreign Policy act. The cold war has been over for 20 years. All right. That was then. This is now. I want to know, what is it that turned president obama around and really strengthened his stance with Vladimir Putin . Here now is former assistant secretary of defense, peter brooks, joining us is don jensen, senior fellow at John Hopkins University center for Transatlantic Relations and leon aaron, director of studies at the American Enterprise institute and author of ideals in the making of the Russian Revolution 1987 to 1991. Okay. Peter brooks, its just you and me. One of the things i like about this correct me if im wrong it wasnt just the snowden episode, although that may have been the straw that broke the camels back. If you listen to jay carney in his press briefing, there are a lot of other issues that have broken down and obama has finally said hes had enough. What caused him to do this . Why is he changing . Why has he had enough . Well, the Obama Administration russia policy has gone from reset to regret. I think i do think, larry, that the snowden case was the camel that broke the the straw that broke the camels back. This, i think, was a personal afront. I think the president was offended by it. He had a bad meeting with putin at the g8 a month or so ago and now its just gotten worse. The situation with syria, the russians continue to buck us on syria. Theres just so many issues out there and i think the president has had enough and i think he had to show some peak to show that putin cant push the president around. I think its going to hurt putin. Its going to hurt putin inside russia because an american president hasnt stood up to him in quite some time. Peter brooks, as a conservative, yourself, working as a conservative think thaank, i applaud the president for this. Do you . Do you applaud him . I do, larry. It makes sense to do that. Although, ive been very unhappy with their russia policy. Starting with the reduction strategy, the new s. T. A. R. T. , i think they canceled the bush era Defense Program and in poland which protected us already from the iranian the burgeoning iranian ibcm threat and the fact that they let him into the wto. Theyve done everything they could to try to make russia a partner and they failed, which means they failed to understand what putin was about, what russias about, and how they delight in seeing the relative decline of the United States influence in the world today. Better late than never. Better late than never. Its a funny thing. I oppose mr. Obama on everything, particularly economic and fiscal issues. But he does something good, like the afghan surge, i favored that at the time. I felt he did something right. I mean, jay carney mentioned today you mentioned some of this. Missile defense talks going nowhere european Missile Defense counts, arm control going nowhere, trade going nowhere human rights going nowhere i mean, i think somehow the president now is going to be a new man. I dont think hes going to run back to putin at all. No. I mean, larry, the problem is the issue at large here is that putin sees us as weak. He sees obama as weak. He sees things like benghazi and other our actions in syria, our nonactions in syria, our willingness to get tougher on iran. He sees this as weakness and hes taking advantage of it. I do disagree with you. I think theres an audience for not only internationally but also domestic audience in russia. Theres still a segment of society in russia that hasnt gotten over the cold war. Standing up to the United States gets people to applaud you in russia in some segments of that society. I think putin knows what hes doing. Hes a masterful politician and hes taking advantage of us. He knows he also has over on the barrel, we have supplies going into afghanistan through russia and equipment coming out and he knows that we need that because its so dangerous to send things through pakistan. All right. We have leon. Its good to see you again. I want to ask you the same question. Do you applaud president obama for the same stance with putin . Better late than never. First of all. Second of all, it was a halfway measure. A true measure would have been sent if he simply did not go to a summit g20 summit thats hosted by a country thats clearly backtracking. Thats a Global Financial meeting. Thats my area. Thats a Global Financial meeting. I think walking away from that is absolutely wrong. This one is manomano, walking away from that. I want to bring in don jensen and ask you the same question. Don, we havent really had an american president tough with putin and russia in quite a while. Not just because president obama wasnt tough with him for the several years but even george w. Bush. What did he say, he can look into his eyes and i can do business with this guy . See his soul, yes. See his soul and it turns out that was a lot of bs. I think its high time and about time. Why do you think obama has done this . I think obama its a little bit too late. I would have done more. I think obama at long last realizes the ambitious agenda he had for the past five or six years is really going nowhere theres disagreements with every issue, as the previous speaker said. Putin wants to use as a punching bag to consolidate his position at home and without obama saying, weve had enough, im not going to meet you, and well go from there. On your comment earlier, larry, about the g20, the problem, of course, is that the russians want to use the g20 and want to restructure the entire International Financial system to the disadvantage of the United States. Yeah, but they cant. They cant. Russia is a thirdrate economic country. The only thing they have, you guys know this better than i do. All they have is Natural Gas Pipelines going into europe. Now, thats what theyve got. Were going to outstrip them in natural Gas Production and were going to export natural Gas Production and were not going to rush through all of that pedestal, too. I think they know that. Leon aron, will they stay here . Let me ask you the same question. In the press briefing today, carney, jay carney mentioned, Missile Defense arms control, trade, and a human rights. So it was not just snowden. I want to ask you, leon, is it a permanent shift in obamas policies towards russia . Well, obamas policies towards russia has one and only one thing in mind and that is a further reduction in nuclear strategic arms. When that is going nowhere, i think obama is beginning to lose patience with putin. He used to forgive him virtually everything and let me tell you i think he would have forgiven snowden as well if there was a movement on nuclear arms because obama is committed to reducing u. S. Nuclear arsenal and needs russia to go along. Now, its not just snowden, though. They expelled the United States agents for international development, harassed ambassador mike mcfall. They said that we are paying the antiputin demonstrators and we abuse and kill russian children adopted by americans. This has been the crudist antiamerican campaign, i think, since the 1970s. Right. Right. So all of that, obama apparently has been willing to take in and not to say anything so long as their was a movement on nuclear arms. I think we dont know this yet but there may have been some breakdown in that negotiations. Putin is not going along and finally were not talking about human rights. Yes. Human rights is very important. I wish obama would be even more aggressive about human rights. Don jensen, let me come back and ask you, this is a little farfetched. Did benghazi, at the end of the day, the whole benghazi episode, which is still going on, its still going on, cia agents in there and whatever, do you think benghazi had a Significant Impact on president obamas thinking and psyche . That may not relate directly to russia but it relates to our Foreign Policy and antiterrorism and being tough. Do you think president obama is a changed man over the benghazi catastrophe . I think with the russians and to protect our withdrawal from afghanistan. To achieve those he would have done a lot and i think has far too much but there is not much progress on the first issue. This is a good time for obama to make a symbolic statement. The real issue is down the road. Friday when the defense ministers meet, is there going to be any movement on Missile Defense further down the road . What will happen if theres a terrorist threat in the olympics next year . I think im not at all convinced that putin is not done messing with the United States and putin has not forgotten the libya issue where he opposed the nato bombing and thats carried over into his views on syria as well. Peter brooks, im going to give you the last word. You have the first word. Im going to give you the last month. On friday, correct me if im wrong two plus two. Secretary state kerry is going to be there, our defense minister is going to be there. If those guys come out, if kerry comes out with some soft statement, that will just be the end of it. That would just undercut this entire action. Do you think john kerry will hang tough . I think hes going to have to be very careful in what he says. I dont expect much to come out of these meetings, especially with the cloud over the obama putin relationship and snowden still hanging out there. Snowden could kick snow at any time he wants. He could do it in the next week, during the g20. You know, the United States doesnt have to go to the olympics. The Winter Olympics in february, we dont have to go there. I think thats a more sensible boycott than the g20. But youre right. Putin could change at any time. Im going to wait for that. Im going to hold that thought because i think obama sticking it to putin is a global world media event. Its the first time anybodys nailed putin in a long while and i think it changes the game. Dont hold your breath, larry. But i may be wrong. Its not a nail. Its a scratch. All right. You guys know more about this than i do. Don jensen, peter brooks, leon aron, appreciate you coming over. Many commentators say the markets just cant shake the fed fears and the taper obsession. But my question is, for gods sakes, havent stocks and bonds already discounted the fed move . A whole story is getting boring and please dont forget, free market capitalism is the best path to prosperity. It is a pity that russia has not engaged more in it. 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Grab your friends and family and start a team today. Register at alz. Org the stocks closed lower today. In favor of scaling back asset purchases. Okay. Its the third day in a row. Monday, the dow is down 46 points on hawkish comments from richard fisher. I believe this is my crosstalk, i am front running my distinguished guests. I cannot accept the fact that i cannot believe it, the bond didnt even move today. Its at 260. All of that is in the market. S p 500 is just below 1700 and change. You cant tell me markets are stupid. I dont believe it. Lets bring in cnbc contributor andrew busch, author and publisher of the bush update and chief Market Strategist from lpl financial. Andy busch, dont tell me markets are stupid. They know its coming. What would be a surprise is if it didnt come, which by the way is my first choice. They know something is up. Yeah. They start it back at the fmoc minutes back in december which we got in january. We got a spike up in rates, 2 on the ten year. Go forward to may, then they backed that down and now they are going full throttle on everyone saying september, letting you know its going to happen. The markets are not dumb, larry. You are absolutely right. If its going to be in the market view, its got to be september or december. I think those are your two options. I dont want it. Im going to be stubborn about this because im not crazy about the economy. Look, earnings havent been that great. 5 of q2 . Big deal. Ill give you another one. I think markets are very disappointed that president obama did not get a good corporate Business Tax Reform plan out there. He didnt do what people hoped he would do. He was going to incentivized the repatriation to explain these market moves. Youre right, larry. Theres certainly no grand bargain market there. One of the areas that have pulled back this week that many commentators are saying its all about the fed or the home builders, obama came out this week and talked about fanny and freddie and be a solvinging them. Not to mention maybe we had some lower order numbers. This is about earnings. Its 1 pullback from fridays alltime high. The reason i can prove it to you, what happened when qe 1 and 2 ended . Rates fell 1. 5 when they were being wound down both times. Andy busch laid it out. Yields went up in may and june. Nothing stabilized in july. The market is ready this time. Right. Completely ready. Good work. Youre both right. Just every time commentators come on this network, its like a johnny one note. They ought to be a lot more creative. Now, having said that, andy busch, i take it from your notes that you really are pessimistic. You are looking for a summer swoon. Tell me why. Yeah. I mean, typically September August and september are bad months for the stock market. You mentioned a couple of things that arent so good there. The pricing in of the fed pulling back. Its really the uncertainty, larry, more than the fed actually doing anything. Earnings havent been good. I would say, you know, maybe its a bit of a rotation out of the u. S. And maybe into euro land. Theres some good numbers coming out there. Germanys numbers were pretty good today. That shows some strength there. Maybe they can get some money from the u. S. Rotating out. But i would say overall we have to be really happy at where the economy is right now because even though weve got fiscal drag between q2 and q3, this economy is going at about 2. 5 and will likely be at 3 by the end of the year. That, you know, floats a lot of great boats. That helps with the deficit and with earnings. Overall, we may see some pullbacks over the next two