S&P 500 Hits Record High Amid Disinflation Fears
The recent inflation numbers have been underwhelming, with both June and July showing negative or nearly flat readings. The June inflation number was negative, while July's was almost as bad. Producer prices were also flat in July.
Despite these numbers, Larry Kudlow believes that disinflation is setting in this summer. He attributes this to the steady hand of new Fed head Kevin Warsh, who has chosen not to raise interest rates despite the low inflation readings.
Kudlow notes that alternative measures of inflation, such as the Cleveland Fed's median CPI and 16 percent trimmed mean, are still above target at 2.7 and 2.6 percent respectively. However, he believes that these numbers will come down to the 2 percent target in time.
The stock market is celebrating this news, with the S&P 500 hitting a new record high of 7,800 on August 13th. Kudlow points out that this is not just a victory for wealthy investors, but also for ordinary working people who own stocks through index funds, ETFs, IRAs, brokerage accounts, or even union pension funds.
He notes that approximately 156 million American adults own stock in some form, making it a broad-based market victory. Kudlow attributes this success to Trumpian policies, including free enterprise prosperity and manufacturing growth.