If you want smooth sailing, you’re in the wrong markets, pal. The roller-coaster seems to continue, with stock indexes closing high on Friday, but at a loss for the week, on a combination of delta-variant fears, the Feds tapering of bond buying, and economic restrictions in China.
But in the long run, are investors saying good riddance to pandemic stagnation, supply-chain anxieties, and inflation woes? Larry Kudlow thinks so.
“The economy is fine,” Kudlow said. “We’re going to be growing at 6% for the next few quarters, I think. The stock market is still holding high ground. We’re at near-record highs across the board, and a lot of the economic news continues to be strong.”
But don’t put it past Democratic hubris to break up the party, with massive spending bills that could tip the scales backward lurching through Congress.
“The next big thing at home is defeating the budget resolution, and the so-called reconciliation bill,” Kudlow told The Cats Roundtable. “Because that has the potential for excess spending, excess inflation, and high taxes, which will do great damage to the economy. I’ve always argued if it ain’t broke don’t fix it, and it’s not broken, and they shouldn’t fix it.”
But with the 2022 mid-terms fast approaching and the economy looking strong, Kudlow believes Democrats simply won’t have the votes for the budget resolution.
“if you’re growing the way we are and you have inflation risks why do you want to launch another spending orgy? No one in their right mind believes that we need desperately need another 6 trillion in spending,” Kudlow told The Cats Roundtable, “and I think that no one in their right mind believes you’re going to tax your way into prosperity, or you want to have some tax warfare against successful individuals.”
To put it simply, Democrats are barking up the wrong tree. It’s proven true that if you tax corporations, you tax the workforce. When you increase the estate tax, you discourage investors and hurt small businesses.
While Biden’s poll numbers have taken a significant hit over his handling of the Afghanistan withdrawal, and the damage to his credibility is just beginning to ripple, Kudlow believes the passing or failure of the Democratic spending bills will make or break his presidency.
“I think it’s going to be a tough battle,” Kudlow said. “I don’t think Afghanistan is going to help that, but I think the battle will be joined mostly on the debate about the domestic economy.”