Kudlow, 72, is not an economist, even though he served as “chief economist” at investing firm Bear Stearns in the 1980s.
I HAVE BEEN SAYING THIS ABOUT KUDLOW FOR YEARS
Rick Newman Senior Columnist, Yahoo Finance•March 9, 2020
The Kudlow Portfolio is tanking.
On Feb. 25, Larry Kudlow, director of the White House’s National Economic Council, suggested it was a good time to buy stocks. “The virus story is not going to last forever,” Kudlow said on CNBC around 2:30 p.m. “To me, if you are an investor out there and you have a long-term point of view, I would suggest very seriously taking a look at the market, the stock market, that is a lot cheaper than it was a week or two ago.”
At the time, the S&P 500 (^GSPC) index was around 3,128. Two weeks later it closed at 2,746. If you took Kudlow’s advice, you were the dumb money buying in a selloff. You’d be down more than 12%.
Kudlow hedged his suggestion with the “long term” reference. But it was still a foolish thing to say, and Kudlow’s not the only one saying it. Trump himself is a frequent stock-market commentator (always buy, never sell) who is now dismissing the recent plunge in stocks as a panicky reaction to “fake news”—the coronavirus outbreak. Treasury Secretary Steven Mnuchin has been another occasional up-talker of stocks. We all know the game: Trump’s minions must say anything to goose stocks and aid Trump’s reelection odds.
We know now that Kudlow issued his buy recommendation in the early stages of a worsening downturn that might end the bull-market rally that stretches all the way back to 2009. The coronavirus has unnerved investors because nobody can gauge the severity and duration of an epidemic forcing closures, cancellations and lost business worldwide. On top of that, a spat between oil producers Russia and Saudi Arabia led to a crash in oil prices and new worries about energy firms going bust.
I HAVE BEEN SAYING THIS ABOUT KUDLOW FOR YEARS
Rick Newman Senior Columnist, Yahoo Finance•March 9, 2020
The Kudlow Portfolio is tanking.
On Feb. 25, Larry Kudlow, director of the White House’s National Economic Council, suggested it was a good time to buy stocks. “The virus story is not going to last forever,” Kudlow said on CNBC around 2:30 p.m. “To me, if you are an investor out there and you have a long-term point of view, I would suggest very seriously taking a look at the market, the stock market, that is a lot cheaper than it was a week or two ago.”
At the time, the S&P 500 (^GSPC) index was around 3,128. Two weeks later it closed at 2,746. If you took Kudlow’s advice, you were the dumb money buying in a selloff. You’d be down more than 12%.
Kudlow hedged his suggestion with the “long term” reference. But it was still a foolish thing to say, and Kudlow’s not the only one saying it. Trump himself is a frequent stock-market commentator (always buy, never sell) who is now dismissing the recent plunge in stocks as a panicky reaction to “fake news”—the coronavirus outbreak. Treasury Secretary Steven Mnuchin has been another occasional up-talker of stocks. We all know the game: Trump’s minions must say anything to goose stocks and aid Trump’s reelection odds.
We know now that Kudlow issued his buy recommendation in the early stages of a worsening downturn that might end the bull-market rally that stretches all the way back to 2009. The coronavirus has unnerved investors because nobody can gauge the severity and duration of an epidemic forcing closures, cancellations and lost business worldwide. On top of that, a spat between oil producers Russia and Saudi Arabia led to a crash in oil prices and new worries about energy firms going bust.
White House chief economic adviser Larry Kudlow adjusts his tie before speaking with reporters about the impact of the Coronavirus on markets in the Brady Press Briefing Room of the White House, Friday, Feb. 28, 2020, in Washington. (AP Photo/Evan Vucci)More
Kudlow couldn’t have known all this, right? Shouldn’t he get a pass for an innocent mistake? How about no. Kudlow’s recommendation came with stocks down 7.6% from their peak, which might sound like a nice dip-buying opportunity in normal times. But this was at a time when the coronavirus death toll in Italy hit double digits, the mayor of San Francisco declared a state of emergency and public health experts were warning of an exponential spike in infections. The volatility index (^VIX) which measures uncertainty in financial markets, had doubled in a week and was well into the range often associated with market turmoil.
Kudlow might be able to argue that he’s simply a sunny analyst eager to see the bright side. But he has a giant conflict of interest when commenting on financial markets, because it’s in his interest and Trump’s that markets do well this year, to help Trump with reelection. If everybody loses their shirts the day after the election, who cares.
What about Obama? It’s a fair question. On March 3, 2009, when markets were reeling from the Great Recession, President Obama said, “What you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal, if you’ve got a long-term perspective on it.” That was a buy recommendation, just like Kudlow’s. Obama should have kept his mouth closed and let the market sort itself it, but history has treated him kindly. Stocks bottomed out six days later—down a nauseating 56%—triggering a bull market that continues to this day.
Yahoo Finance reached out to the White House to ask if Kudlow still recommends buying stocks, or has any regrets about his Feb. 25 buy recommendation. We got no response. That sounds about right.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman.
In coronavirus crisis, Trump's stock market advice keeps looking worse
David Knowles Editor, Yahoo News•March 9, 2020
Kudlow couldn’t have known all this, right? Shouldn’t he get a pass for an innocent mistake? How about no. Kudlow’s recommendation came with stocks down 7.6% from their peak, which might sound like a nice dip-buying opportunity in normal times. But this was at a time when the coronavirus death toll in Italy hit double digits, the mayor of San Francisco declared a state of emergency and public health experts were warning of an exponential spike in infections. The volatility index (^VIX) which measures uncertainty in financial markets, had doubled in a week and was well into the range often associated with market turmoil.
Kudlow, 72, is not an economist, even though he served as “chief economist” at investing firm Bear Stearns in the 1980s. Kudlow was a successful Wall Street salesman who capitalized on an upbeat personality to land a job as a commentator and show host at CNBC, starting in 2002, which made him famous. He’s a fervent supply-sider favoring tax cuts and laissez-faire policies as the best path to a strong economy, one reason Trump tapped him to replace Gary Cohn at the White House in 2018.
Kudlow has produced some famously bad predictions, however. “Larry Kudlow is usually wrong and frequently absurd,” housing analyst Bill McBride, who pens the Calculated Risk blog, wrote in 2016. In 2005, for instance, Kudlow, argued that “bubbleheads” predicting real estate crashes in Las Vegas and Florida were “dead wrong.” Kudlow turned out to be dead wrong. An epic housing bust began right around that time, with gigantic losses in Las Vegas and Florida. In 2007, Kudlow wrote, “there is no recession.” In reality, a terrible recession began that very month.
Kudlow was one of several Trump officials who predicted the 2017 Republican tax cuts would produce a surge of economic growth, perhaps hitting 4% for the first time since 2003. It hasn’t happened. Growth under Trump peaked at 3.3% in the second quarter of 2018 and drifted down to 2.3% by the end of last year. Most economists think the economy was growing at around 2% before the coronavirus crisis, which will undoubtedly slow the economy.
Kudlow might be able to argue that he’s simply a sunny analyst eager to see the bright side. But he has a giant conflict of interest when commenting on financial markets, because it’s in his interest and Trump’s that markets do well this year, to help Trump with reelection. If everybody loses their shirts the day after the election, who cares.
What about Obama? It’s a fair question. On March 3, 2009, when markets were reeling from the Great Recession, President Obama said, “What you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal, if you’ve got a long-term perspective on it.” That was a buy recommendation, just like Kudlow’s. Obama should have kept his mouth closed and let the market sort itself it, but history has treated him kindly. Stocks bottomed out six days later—down a nauseating 56%—triggering a bull market that continues to this day.
Yahoo Finance reached out to the White House to ask if Kudlow still recommends buying stocks, or has any regrets about his Feb. 25 buy recommendation. We got no response. That sounds about right.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman.
In coronavirus crisis, Trump's stock market advice keeps looking worse
David Knowles Editor, Yahoo News•March 9, 2020
Almost forgotten in the rush of doom-and-gloom headlines about the spread of coronavirus and Monday’s record-breaking stock market sell-off is President Trump’s two-week-old advice to would-be investors to buy stocks.
Though the first market jitters over the economic impact of coronavirus had already led to consecutive triple-digit losses, Trump posted an optimistic appraisal of the investment landscape on Feb. 24.
The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!
— Donald J. Trump (@realDonaldTrump) February 24, 2020
Hours after Trump’s tweet was published, the Dow Jones Industrial Average closed at 28,992, down 227 points.
A day later Larry Kudlow, Trump’s director of the National Economic Council, made a second appeal on behalf of the beleaguered stock market.
“The virus story is not going to last forever,” Kudlow said in an interview. “I would suggest very seriously taking a look at the market, the stock market, that is a lot cheaper than it was a week or two ago.”
Though the first market jitters over the economic impact of coronavirus had already led to consecutive triple-digit losses, Trump posted an optimistic appraisal of the investment landscape on Feb. 24.
The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!
— Donald J. Trump (@realDonaldTrump) February 24, 2020
Hours after Trump’s tweet was published, the Dow Jones Industrial Average closed at 28,992, down 227 points.
A day later Larry Kudlow, Trump’s director of the National Economic Council, made a second appeal on behalf of the beleaguered stock market.
“The virus story is not going to last forever,” Kudlow said in an interview. “I would suggest very seriously taking a look at the market, the stock market, that is a lot cheaper than it was a week or two ago.”
President Trump and Larry Kudlow, director of the National Economic Council.
(Photo illustration: Yahoo News; photos: AP)
Despite Kudlow’s optimism, the Dow fell another 1,031 points that day, to close at 27,912.
In fact, that week turned out to be the worst for the stock market since the 2007 financial crisis, with the Dow losing 3,500 points and wiping out $3 trillion in value.
On Feb. 27, three days after offering his stock market tip, Trump announced he was appointing Vice President Mike Pence to head up his coronavirus task force, which also included Kudlow. During a White House press conference, Trump assured assured the country that the number of Americans infected with the virus “was going very substantially down, not up,” and that “within a couple of days” the tally would be “down close to zero.”
Perhaps buoyed by that infectious confidence, Trump’s son, Eric, jumped on the “buy the dip” bandwagon.
In my opinion, it’s a great time to buy stocks or into your 401K. I would be all in... let’s see if I’m right...
— Eric Trump (@EricTrump) February 28, 2020
But just as the number of cases did not go down as Trump had foreseen (the number has risen from 60 confirmed cases at the time of Trump’s press conference to over 600 as of Monday), the stock market proved an equally bad bet.
On Monday, it fell 2,014 points, the largest single-day point loss in history, and closed at 23,851. For those keeping score at home, that’s more than 5,000 points lower than when Trump proclaimed the markets were starting to look good.
Of course, Trump isn’t the first president to encourage Americans to invest in the stock market. On March 3, 2009, then-President Barack Obama saw an opportunity to buy following a nearly 300-point dip in the Dow, which at that time had fallen to 6,726 points in the wake of the Great Recession.
“What you’re now seeing is profit-and-earnings rations are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it.”
From the time he said that through the end of his presidency, the S&P 500 rose by nearly 225 percent.
Despite Kudlow’s optimism, the Dow fell another 1,031 points that day, to close at 27,912.
In fact, that week turned out to be the worst for the stock market since the 2007 financial crisis, with the Dow losing 3,500 points and wiping out $3 trillion in value.
On Feb. 27, three days after offering his stock market tip, Trump announced he was appointing Vice President Mike Pence to head up his coronavirus task force, which also included Kudlow. During a White House press conference, Trump assured assured the country that the number of Americans infected with the virus “was going very substantially down, not up,” and that “within a couple of days” the tally would be “down close to zero.”
Perhaps buoyed by that infectious confidence, Trump’s son, Eric, jumped on the “buy the dip” bandwagon.
In my opinion, it’s a great time to buy stocks or into your 401K. I would be all in... let’s see if I’m right...
— Eric Trump (@EricTrump) February 28, 2020
But just as the number of cases did not go down as Trump had foreseen (the number has risen from 60 confirmed cases at the time of Trump’s press conference to over 600 as of Monday), the stock market proved an equally bad bet.
On Monday, it fell 2,014 points, the largest single-day point loss in history, and closed at 23,851. For those keeping score at home, that’s more than 5,000 points lower than when Trump proclaimed the markets were starting to look good.
Of course, Trump isn’t the first president to encourage Americans to invest in the stock market. On March 3, 2009, then-President Barack Obama saw an opportunity to buy following a nearly 300-point dip in the Dow, which at that time had fallen to 6,726 points in the wake of the Great Recession.
“What you’re now seeing is profit-and-earnings rations are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it.”
From the time he said that through the end of his presidency, the S&P 500 rose by nearly 225 percent.
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