Kudlow: Trump Annoyed Because It Seemed Like Time And Counting Votes Stopped
First on CNBC: CNBC transcript: National Economic Council Director Larry Kudlow speaks with CNBC’s “Squawk on the Street” today discussing the strength of the economic recovery and counting votes.
Get The Full Seth Klarman Series in PDF
Get the entire 10-part series on Seth Klarman in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.
Q3 2020 hedge fund letters, conferences and more
Data suggests quant hedge funds are having a lousy 2020, especially compared to traditional stock pickers. According to Bank of America, for the year to the end of September, the average quant US equity mutual fund was up just 3.3% compared to 8.3% for the average stock picker. Other research suggests an even worse performance. Read More
Economic Advisor Larry Kudlow On The Strength Of The Economic Recovery And Counting Votes
All references must be sourced to CNBC.
KAYLA TAUSCHE: National Economic Council Larry Kudlow. Larry, good morning. Good to see you.
LARRY KUDLOW: Good to see you, Kayla. How are you?
TAUSCHE: I’m good, thank you. Could use a little more sleep but I think we all could. You know the campaign in the White House has been preparing for this idea that there could be a legal challenge to the immediate outcome of the election this week. Chris Christie overnight said that the President’s decision to come out and make comments, casting doubts on the electoral process, was a bad strategic decision. Do you agree?
KUDLOW: Look, no, I don’t agree. Chris Christie is a great pal of mine, he’s wonderful man but look, President was annoyed last night. He’s very angry because it just seemed like time stopped and counting votes stuff, and he had leads in crucial states, and none of the networks were giving it to him. So, I think he was very annoyed and look, there is a suspicion here of fraud. I’m not going to declare it, I’m just going to say we are taking the proper precautions and I guarantee you the other camp is too, with the finest lawyers, just to make sure you know, remember this, there’s a big difference between counting votes, right, and mailing in ballots.
There’re issues about timing. So, I’m not concerned so much, it takes a couple more days to count legal ballots, long as they get them in on time. That’s been an issue in Pennsylvania, whether it goes into the court system, we will see, I’m not an attorney as you know, but you know, I think look, bottom line here, Kayla, real quick. The President is in very good shape and in our judgment, we are confident. He needs to pick up one or two of some key states, he looks very good there, he looks great in Pennsylvania. He looks great in Michigan and Wisconsin, they’re very close. You know, in things like Arizona. Here’s another thought…
TAUSCHE: Larry, I just want to, I just want to…
KUDLOW: Not all the, not all the mailed in ballots are going to go to Mr. Biden. The President, who finished very strong with a great economic message, he is going to get a very large fraction of these mail in votes. So, the fact that there’s you know all this x hundred thousand mail in votes and they’re all going to Biden, that’s just utter…
TAUSCHE: And certainly, we will make those calls when we have those numbers and are able to do so, Larry, but you know, you raise the suspicion of fraud but suspicion is not evidence and in many of these states, I’m thinking of Pennsylvania specifically, federal judges have allowed the states to count these ballots in many of these cases because of the pandemic, if they are postmarked and dropped by a certain point on election day. Supreme Court in many of these cases has upheld these decisions. How can the President say they’re not legal?
KUDLOW: Look, I’m not declaring fraud. I’m not saying. We will let the lawyers determine the legality, we’ll let the court system work. America is the greatest democracy in the world, and it will work just as it always does. Once again, I will say to you, the President is in very good shape on the remaining swing states, very good shape. I want to make another point. It was no blue wave yesterday. Okay. The Republicans did very well in the Senate. They may lose one seat, maybe not, but they are going to maintain the majority in the Senate, so that right away says, guess what, no socialism, no major tax hikes to destroy the economy and the stock market. Also, there was no blue wave in the House. So far as I see it, the GOP has picked up at least four seats in the House. This was a very strong day for the Republican Party, and its principles of free enterprise, low taxes and regulations, maintain energy independence and tough fair-trade deals. President Trump’s agenda did very well yesterday, and I still think he’s going to carry this thing through, once everything is counted.
DAVID FABER: Larry, you are absolutely correct. No blue wave, that is one thing I think we can all agree is apparent right now. I should add though when it comes to the battleground states if these votes counting were to stop right now, your candidate would lose. Biden would get to 270, he would win the presidency. And I wonder if that prospect actually does come to fruition, what do you see the next two months like for you, for the administration, as it potentially exits? What is it you’d like to accomplish?
KUDLOW: Well, okay, just on that first point, David. Look, this is not unusual. Counting votes is not going to stop. It’s going to go through as long as they’re legal ballots, it’s fine. We do this every four years…
FABER: No, absolutely. It’s the President who seems to want to say stop counting the votes. We all agree.
KUDLOW: No, actually. Look, I don’t want to waste your time with that.
FABER: He just tweeted that.
KUDLOW: You’re a bit nitpicking here, David. Let me just say, the President was concerned that it looked like nothing was happening. It looked like, in fact, there was no counting going on it’s just like the election night frame just stopped so he was very annoyed, we’ll work through that today, and I think things will, you know, be much more copacetic. Now, next two months, we will be meeting today and the remaining days of the week, amongst the senior policy staff, the NEC and so forth and we will be meeting with the President regarding an agenda. We have a lame duck Congress but we have a lot of work to do. I’m not going to speculate on you know assistance plans and this and that but there are still a couple of very crucial asks that we would like with respect to small business assistance, PPP, and unemployment assistance to get folks through the next few months. I do want to say this, the economic numbers are coming rolling in and I mean this is clearly a strong V shaped recovery. We’re going to get a pretty good jobs’ report Friday, I reckon, but I just saw a survey from a very well-known Wall Street economist who’s generally ranked number one, his trucking survey is booming off the charts and that complements what we’ve seen in housing, retail sales, automobiles, business applications, small business confidence. What you got here is the saving rate is high, so that’s your reservoir of spending, but the inventories are low, which means they’re going to have to rebuild inventories, that’s more jobs, more manufacturing, more construction, as a tremendous housing boom at good wages, the economy’s gonna be very strong. Momentum is right now is just terrific.
TAUSCHE: Larry, you mentioned… sorry Carl, go ahead.
CARL QUINTANILLA: No, I mean, Larry, I was just gonna say, it doesn’t sound like you’ve been unnerved by relatively weak ISM today or some misses in housing and pending or new in the last couple of months that you still believe that the momentum we saw in Q3 is building into Q4 and do you see Q4 being positive? In terms of GEP.
KUDLOW: Yeah, I do Carl. I think it’ll be at least 5%. The ISM manufacturing index, the one I’m really focused on, and that was gangbusters a few days ago, as you know, including new orders, including employment. And actually, the inventory rebuilding is just beginning. I also see on the street, I mean, I don’t follow it like I used to but the profit estimates, the earnings estimates are being revised up but, you know, maybe not every company but generically, profit estimates are being revised up that’s great for the, for the market and the economy.
Household wealth is strong and let’s not forget, it’s maybe underrated, but Federal Reserve’s pumping money in and buying assets into money supplies up I think 24% year on year, that’s very powerful stimulus, with a zero-interest rate. So, yeah, I think you’ll not only be plus in Q4, Carl, I reckon it could come in at least 5%. I think this momentum is going to carry right through into 2021. And, you know, hopefully we have pro-growth policies.
TAUSCHE: Larry, there are two dates that we have circled on the calendar now, December 14, which is when President Trump has been fundraising for his reelection campaign until that is when the electors will meet and vote, and then December 11, which is when government funding runs out. You know how much the markets value certainty, what happens between now in the middle of December?
KUDLOW: Well, look, we’ll probably negotiate another continuing resolution. I don’t want to commit the President right now. Because last night was a very late night, I was 4AM, I don’t know if he got any sleep at all, but I’m certain we will have success in negotiating a continuing resolution.
TAUSCHE: Do you attach a stimulus to that resolution? Is that the plan now?
KUDLOW: I won’t say that, Kayla. I don’t think we’re there, we’ll resume. I’ll be talking to Secretary Mnuchin in just a little while after this interview. You’re my first stop of the day, it was a very late night for this guy. I would just say, I’d be in better shape to answer those questions later on. Look, we will look at some of our key targets for the assistance package as I said, PPP is one of them and unemployment assistance is another, there are also others. The Electoral College will go about its business, Kayla.
I mean, I think by that time, we will know, ballots will be counted. We’ve been here before. It’s not that unusual. Our system is geared to do this. And again, I’m still confident I think the President is going to be reelected because I think he’s in great shape in some of these remaining key states. I mean, in Pennsylvania, gee, I mean I don’t want to speculate on that I’m not the campaign guy but Pennsylvania, we’re up 700,000 in votes counting. I know there’re a lot of mail in ballots, but a large fraction is going to go to President Trump, okay, let’s not forget that. That’s the way that game’s gonna work.
TAUSCHE: We should note that both campaigns have held press calls this hour both campaigns expressed confidence in Pennsylvania yesterday, both campaigns said that their internal polling was showing them winning Pennsylvania so we’re not going to make any call until we actually have those numbers, Larry, but you mentioned the President’s strong closing argument that he made in recent weeks. Part of that argument was that if there was a Biden presidency, people’s 401ks would crash, and the market and the economy would go into a depression. We’re looking at the stock market digesting the prospect potentially of divided government and it’s taking it in stride. How do you react to that?
KUDLOW: Well, first of all, as I said earlier, I think with the results as we know them in the Senate and the House, even while the presidential votes remains to be counted, what you’ve got here is a Republican Senate came through last night very strong and a Republican pickup in the House. So that tells me, you’re not going to get some of these crazy left-wing proposals, you’re not going to get across the board tax hikes, you’re not going to get the end of natural gas fracking, for example, or the end of low-cost electricity, or the end of energy independence.
These are all positives for the stock market, okay. I believe President Trump will still win, and his leadership will continue, and we will work on the same pro-growth principles as we have before that deliver a strong economy, but we’ll wait for that, you’re quite right, we’re not gonna make any calls this morning, I get that. I’m just saying, the Senate and House elections were extremely favorable for the GOP, and that means a lot of far left, far out stuff is not going to happen and that has to be good for the stock market, and I’m not surprised it’s up just on that basis alone.
TAUSCHE: Well, Larry, we appreciate being your first stop this morning but we’d love to have you back after some of those principals meetings so we can follow up on this conversation. Larry Kudlow…
KUDLOW: Anytime, Kayla. Thank you very much.
TAUSCHE: Director of the National Economic Council. Carl.