FOX Business host Larry Kudlow reacts to the market rally following President-elect Trump’s victory on ‘Kudlow.’
Markets are applauding Trump’s mandate for policy change and that is a matter of contention. President Trump’s landslide victory – winning both the popular and electoral college votes – represents a significant mandate for change. Yes, it is mandatory to change the Biden-Harris administration because no one wanted a second term, but it is also mandatory to change policies almost across the board.
One of those key policy changes is evident in the the economy. Now, I keep reading from different media that Mr. Trump will cause inflation and do a lot of damage to the economy. Therefore, it is worth noting that one of the best barometers of economic confidence in the future economy is the forward-looking stock market.
The day after the election, Wednesday, November 6, the stock market registered its biggest rally in history. Mr. Trump he is an avid follower of the stock market, as I can attest to his first term – when almost whenever I walked into the Oval Office, regardless of the agenda, his first question to me would be the stock market.
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Stocks may change their minds, but Mr. Trump knows very well that he is not a predictor of the future economy – and he sends thumbs up or thumbs down about economic policy. All these Nobel Prize winning economists keep telling people how bad Trump’s agenda is, but the stock market begs to differ. Tax cuts, deregulation, and energy governance – the three main pillars of Mr. Trump’s economic plan. Trump – very strong for economic growth and future profits. Therefore, stocks continue to rally.
From the opening of the election on Tuesday until the close of business today, more or less, the DOW rose more than 2,000 points. And, interestingly, gold prices fell above $100 – which is a vote of confidence in the Trump dollar. Several times during the campaign, the president-elect talked about keeping the dollar as the world’s reserve currency and generating new economic incentives for private investment and economic growth, which could add to the attractiveness of the Trump dollar.
Just yesterday, Mr. Trump has nominated former acting ICE Director Tom Homan as the new “border chief,” and has quickly told negotiators that his top priorities are identifying and deporting terrorists and threats to public safety. Improved public safety acts as a tax cut for the economy, reducing crime in cities and their businesses, families, and schools and Mr. Trump intends to act quickly on that.
Then there is the overriding question of inflation. Mr. Trump criticized more than $300 billion in tariffs on China during his first term, but there was no inflation. Joe Biden kept prices in place during his tenure, but there was much more inflation.
Mr. Trump is adept at using prices as a negotiating tool – both on trade and non-trade issues, and may preside over tariff cuts with some countries, as well as tariff increases with others. One place he is likely to use tariff negotiations on a non-trade issue is Mexico. Look for President Trump to restore his “Stay in Mexico” policy, and he has already suggested to the new President of Mexico Sheinbaum that if he does not cooperate with the new “Stay in Mexico,” he will slap at least a 25% tax on all their exports.
Stopping the flow of illegal immigrants is not just a matter of law and order and crime, but a matter of economic cost. Research has shown that most of the illegal population does not work, but relies on public money for food, housing, health care and other social services. It is currently costing us a fortune. Stopping it will save a fortune.
Finally, going back to the mandate for changes in tax cuts and fiscal policy – lower tax rates will pay for themselves, as the Laffer curve teaches and history proves. Faster economic growth, greater reductions in tax evasion and offshore remittances will increase revenue.
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Another part of the deficit reduction may come from Elon Musk’s government efficiency talks, where the genius inventor is talking about two billion dollars in low income, and creative ways to turn the holdings of federal assets into income-generating enterprises.
No one talks about this. It should. Voters want a mandate for change. Mr. Trump will give them. Forward-looking financial markets clearly tell us that Trump is on the right track. All these nitpicking media liberals should stop bellyaching and at least give the new president-elect a fair chance to succeed. That’s the wrap.
This article is adapted from Larry Kudlow’s opening remarks on Nov. 11, 2024, edition of “Kudlow.”
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