A 5 to 10% Pullback in the Market will be Bullish
And Low Inflation in the US is Like a Tax Cut for the Economy
Economist Larry Kudlow, a former adviser to President Ronald Reagan, said he is Bullish stocks because profits are rising, inflation is low and consumer confidence is high.
“I’m very Bullish on stocks. A 5 to 10% correction would make me more Bullish,” Mr. Kudlow said on TV last week
The DJIA posted the 1st weekly loss in the past 3, as investors became cautious over increased political tensions between the US and North Korea.
Mr. Kudlow said he’s optimistic about stocks because of healthy economic indicators.
“Profits are rising. I don’t care what the rate of increase necessarily is, they’re just rising,” he said. “Low inflation is a tax cut for consumers and businesses and everything. We’re getting lower than expected inflation. That’s a huge tax cut on the whole economy and it’s going to help a lot as we go forward.”
The CPI (consumer price index), a measure of inflation published last week by the US Labor Department, rose 0.1% in July from a month earlier, missing Wall Street estimates for 0.2%.
Cars and hotels showed drops in prices, which is worrisome for those industries and the jobs they support. While too much inflation erodes the spending power of consumers and is considered bad for the economy, an inflation rate that is too low is interpreted as a sign of weak demand for goods and services.
Low inflation could prevent the Fed from raising interest rates this year.
The Fed targets 2% inflation based on a separate measure of prices published by the US Commerce Department.
New York Fed President William Dudley said Thursday that “it’s going to take some time” for inflation to rise to the central bank’s target even as he offered a generally positive outlook for the US economy, job market and price pressures.
“Consumer confidence is the highest in 16 years,” Mr. Kudlow said.
The Bull is entitled to a pause to refresh, its August.
Have a terrific week