Let’s start out on an optimistic note by connecting the dots between a beautiful stock market rally over the past month and virtually every polling survey during the period pointing to the cavalry coming.
I’m not saying there aren’t other factors in the stock rally — of course there are — and I’m not saying that a Republican takeover of the House and Senate will solve all our problems, because it won’t. President Biden will still fight free-market capitalism with his veto pen.
I will say, though, that if the polls are correct — and polls don’t vote, only voters vote — and if the trends are right, the GOP-led Congress will at the very least stop the bad stuff. There will be a lot less spending. No more tax hikes.
Mr. Biden’s anti-business regulatory regime will at least be slowed down, and, maybe most importantly, the GOP will probably begin the fight immediately on January 3 when they take over with a House-Senate bill that would remove the handcuffs from oil and gas production and reopen the door to fossil permitting, pipelining, refining, and so forth. Could such a bill beat a Biden veto? Well, I don’t know, but it might.
Opening the oil and gas spigots would probably be the most important first step toward reducing inflation and a recession-ending growth plan. It would take the pressure off the Fed, right?
I mean how about Chairman Powell getting out there and publicly calling for Congress to take the handcuffs off the fossil fuel industry and suggesting and hinting that the Fed’s interest rate assault would come to an end if Congress produced a sensible energy policy?
The Bidens’ radical climate change strategy had been a total disaster, and the cost of living in all of its forms is the no. 1 issue in the midterm elections.
Even today we got a report showing the personal consumption price index up 6.2 percent for the past year, and core inflation up more than 5 percent. Of course the CPI is running above 8 percent and all in since Mr. Biden’s inauguration consumer prices have jumped almost 13 percent.
As we’ve discussed many times, the impact of fossil fuels on everyday life is enormous.
The price increases extend beyond just oil and gas and high-priced diesel and home heating fuel, to clothing, toothpaste, laptops, diapers and baby toys, MRIs and stethoscopes, tents, tires, toothbrushes, and on and on.
Food prices have been affected because fertilizers require fossils. Grocery prices have increased more than 17 percent since Biden took office.
So, in terms of conquering inflation and restoring prosperity, the first GOP initiative come early January might be combined with a Federal Reserve ceasefire for a quick turnaround from the stagflationary crisis in which we find ourselves. Is the stock market telling us that? Well, it might be. After all, stocks discount the future. They discount future profits, the future economy, future interest rates, and even future politics. I’ve seen it work before. It could happen again.
Now, Mr. Biden’s out there on the campaign trail, once again trying to rewrite history. He is simply incapable of telling the truth about the economy. His so-called closing pitch argues that he inherited a deep recession. Of course, he never mentions inflation, and now he’s saying if you elect Republicans to Congress, they’re going to make everything worse. No, they’re not, Mr. President. No one believes that.
By the way, you inherited a non-inflationary boom from President Trump’s policies and in barely more than a year you turned the boom into a bust.
Real wages have been falling for 18 months for working people, and people are sitting around kitchen tables deciding to cast their votes against your socialist progressivism.
Incidentally, back to the stock market: Stocks love divided government, and that’s going to be one of the themes of the election outcome. I call it checks and balances.
Three Democratic Houses have brought enormous damage to America’s economic and national security. People want to put an end to that three-house majority. They don’t like the economic policies, they don’t like the soft-on-crime policies, they don’t like the high-cost-of-living policies, they don’t like the open-border policies, and they don’t like the cultural and social transformation policies in schools and elsewhere.
In short, they want change. Checks and balances. Is the stock market really such a great barometer? Well, most working people own shares in retirement accounts and pension funds. Could be as many as 150 million people. That’s a big number. When stocks go down, it’s really a vote of no confidence in America’s future. When stocks go up, it’s a vote of new confidence in America’s future.
Until the last few weeks, investors have suffered a bear market, but as the polls have shifted toward the cavalry it looks like the investor class, which is a huge chunk of the working class, is gaining optimism. Am I making too much of the stock market story? Well, maybe: Just giving you some food for thought. But I do believe this stock market rally is celebrating the cavalry.
From Mr. Kudlow’s broadcast on Fox Business News.
Larry Kudlow was the Director of the National Economic Council under President Trump from 2018-2021. His Fox Business show "Kudlow" airs at 4 p.m &. and his radio show airs on 770 ABC from 10:00 a.m. to 1:00 p.m.