Larry Kudlow: Fed Should Let Economy "Rip" And Not "Overdo It" With Rate Hikes

The White House didn't officially confirm that CNBC's Larry Kudlow would replace Gary Cohn as director of the National Economic Council until this morning, but last night, Kudlow demonstrated that he's already comfortable in the role during a wide-ranging interview with his (soon-to-be-former) colleagues on America's No. 1 business news network.

To wit, Kudlow surprised investors by offering his views on certain topics that are typically left to the Treasury Secretary of Federal Reserve officials.


Investors were surprised to hear Kudlow declare, with little warning, that he would "buy the dollar and sell gold," adding that he has "no reason to believe the president doesn't support a strong, stable dollar."

But given the centrality of a weak dollar to Trump's trade-focused agenda, one Twitter user wryly pointed out that the comment was Kudlow's first documented lie in his new job...


And although he doesn't get his own "dot" on the Fed's dot plot, Kudlow apparently felt comfortable offering his two cents on how the central bank should go about raising interest rates, cautioning that the Fed shouldn't rush to hike rates four times this year.

We'd like to know: Does Kudlow realize that, 819 days into the hiking cycle, stocks actually love higher rates (despite all the chatter from market strategists)? ...for now!


Given the "goldilocks" economy that we're living in (though that perception is already unraveling) Kudlow says the Fed shouldn't rush to hike rates, and should instead just "let it rip" when it comes to growth...

Evans: Guys, thanks for joining us we love this concept. Karen, whats your Larry trade now? No pressure cause it is not like he is listening or anything.

Karen Finerman: All right, yeah I mean, I love Larry I got to say, going into today, long a lot of puts, didn't love the Gary Cohn change, but of everyone out there, im most excited about this choice, outstanding hell do a great job I think –

Kudlow: Thank you

Finerman: A very, very great job, not just on policy, but the other parts you talked about, communication. Which is maybe equally or sometimes more important. You have the skills to do both so I think you’re an outstanding choice.

Kudlow: Thank you, Karen, much appreciated.

Tim Seymour: Larry, congratulations, and major yes buyers as we say on Larry, mostly because if you look at the market over the last couple days, we've gone with being concerned about overheating to a place where now we question growth granted, there's been a couple macro points, retail sales, PMIs around the world slowing a little bit, but bottom line is the world needs to understand, I should say markets need to understand what the world understands. Were in a better environment globally as Larry pointed out yes better to punish your enemies and not your friends at the same time we are learning this now, who is pro or against, fair deals or not. Regardless the momentum for corporate EPS and where are with in the country right now is still bullish.

Kudlow: Yes.

Seymour: The fact in three days we have sold to different places in the market, and sentiments, have caution on that view, and, therefore, Larry is a fresh voice in the equation, and if that takes us higher, I'm a yes buyer on Larry Kudlow.

Kudlow: thank you, thank you very much look, somebody said profits are the mothers milk of stocks. I cant remember who that was.

Evans: it could have been a wise guy on CNBC. I'm going to put him on the spot really now

Kudlow: the profit picture is good. It’s looking real good, and growth is not inflationary just let it rip for heaven's sakes. The market is going to take care of itself. The story takes care of itself let it rip the fed will do what it has to do, but I hope they don’t overdo it.

Kudlow worked at the New York Fed early in his career. More recently, Kudlow had said that the Trump tax cuts would give the central bank more room to raise interest rates more quickly - to help ensure that the central bank is ready for the next crisis.

Gary Cohn, Kudlow's predecessor was more circumspect. As Bloomberg reminds us, Cohn deferred to the Fed when asked for his views on the central bank's policy.