US Economy Strong, Growing, as Financial Markets Consolidate Big Gains
Savvy participants are cost averaging down and “buying the dip’
“Investment profits are very strong,” economist Larry Kudlow said in an interview Friday.
“I buy them and hold stocks for the long run, that’s always been my philosophy,” said Mr. Kudlow, who served as The Trump Campaign’s senior economic adviser.
Many of the trading algorithmic and leveraged instrument changes that have occurred are driven by computers, not humans, Mr. Kudlow also said Friday.
The CBOE Volatility Index (VIX), referred to as the “fear index” spiked to 50.24 triggering a lot of programmed selling.
Notably, for most of this Bull Market run since 8 November 2016, the VIX was at 30 year lows in the low teens.
“That’s what happened today. It’s not humans. It is computers. It’s the world in which we live. These things happen,” Mr. Kudlow said.
Ironically, good news for the economy can also be bad news for the stock market.
“Real interest rates go up, investment returns are rising in the economy, so the stock market requires a higher real investment rate,” he said. “It is the fear of inflation, that spooked the stock market,” said Mr. Kuldow.
But, no inflation, no growth.
Mr. Kudlow said he also agrees with the President’s call for more defense and military spending, but it is disappointing that the new spending bill did not include cuts to domestic spending.
“The Democrats insisted that whatever we spent on military had to be also spent on domestic,” he said.
“It is a lousy deal. I think there’s a lot of reforms that need to be done. I do not think it is a catastrophe but I think you’ve got to have a stronger budget outlook.”
|NYSEArca:VXX||50.03||9 February 2018||-5.21||50.55||56.5||48.61||75,025,100|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Bullish (0.25)||Neutral (0.17)||Bullish (0.32)||Bullish (0.26)|
Have a terrific week.