hello everyone welcome to kudlow i'm
larry kudlow so the plunging stock
market has finally dropped into i think
it's bear market territory what they
call 20
full-fledged correction this comes as no
great surprise we'll get the final
tallies as the show goes on
but frankly the market's been falling
all year
and look i take no pleasure from this
over 100 million americans are invested
one way or another in various retirement
accounts the vast majority of these
retirement savings investors are middle
income working folks they're not rich
they don't own the bulk of the market
wealth
but for them their monthly reports from
various financial planners or brokerage
firms are important they're very
important
now for most of my career i've argued
that the best investment strategy is
stocks for the long run
professor jeremy siegel wrote the book
on this as did professor burt malkiel
jeremy from penn malcolm from princeton
and i think folks who followed their
advice to buy on weakness and then hold
hold for 40 or 50 years
i think those folks have done very well
now this current bear market correction
is certainly not the end of the world i
mean for those faint of heart i
recommend perhaps not opening your
monthly statements when they come in at
least for a little while
for others i suggest deep prayer and
meditation look we will get through this
i promise but but but
there's no question in my mind that
however temporary these biden radical
progressive big government socialist
policies may be
they have been driving stocks down all
year
excessive federal spending
the war against fossil fuels the fed's
money printing
have all contributed mightily to a sharp
rise of inflation
and a closely linked upturn of market
interest rates and
a pronounced drop in the living
standards of typical american families
where spiking inflation has completely
undermined solid wage and price
increases
i mean real wages have fallen for 13
consecutive months according to some
metrics
if you look under the hood of the major
stock market averages you see it even
more clearly for example the s p 500
retailing index
down over 30 percent year to date and if
you tack on the producer price index
increase of 11
those consumer related stocks are off
over 40 percent this year in real terms
similarly home builders index which is
now approaching a 50 loss in real terms
semiconductors nearly 40 percent drop
the consumer discretionary cyclicals off
over 40 percent
infotech off over 35 percent i don't
want to bore you with all these numbers
but i'm trying to explain
if you look under the hood of the major
averages
key economic sensitive sectors have been
in a deep air market for quite some time
and they are
all pointing toward recession
now they could be discounting
inflationary recession as well
that would be the worst of all possible
worlds i mean look at the 30-year
mortgage rate at five and a half percent
that thing is about doubled in the last
year 10-year treasury notes just about
doubled to 3
the federal reserve's target rate
which is now hovering at just under one
percent currently that's a big
nothingheimer it could go as high as
three and a half percent by year end
that according to sound money advocate
jim bullard who's president of the saint
louis federal reserve bank
now unfortunately
the fed fell under the spell
of the woke by nomiks
spend borrow print
and the fed remained in denial of the
inflation threat of these left-wing
policies
and now
they have to pay the piper as reality
closes in around him
i'm going to say it again the only way
to stop inflation is by abandoning the
progressive agenda stop the massive
spending stop the regulatory control
over the economy stop the radical
climate policies that have produced less
energy and higher gasoline prices and
huge consumer angst
people in the biden white house
choose to ignore the stock market
big mistake at their own peril the stock
market is reflecting what the rest of
the country is saying and thinking
i mean the latest ap poll shows biden
approval at 39
his disapproval
60
a cnn poll shows 86
are either concerned
or scared about the country's direction
whereas 14 percent are either excited
or optimistic
i'd really love to meet those excited
crowd no just that's a joke that was a
joke anyway this is all serious business
if i may summarize
the key point whether it's a stock
market or whether it's consumers or
whether it's working families or whether
it's well-heeled businesses
nobody has any confidence in the byte
administration virtually nobody and you
know what confidence matters a lot a
free market economy is built on
confidence
but that confidence has to rest on the
rule of law and limited government and
sound money and minimal tax rates and
also the great american idea
that as good as the country is today
it will be even better
in the future
that's what reagan taught me
the best is yet to come
but unfortunately we've lost that
thought for the moment
but folks i will tell you this trust me
we will get it back trust me on this
the cavalry is coming