Larry Kudlow: People are deciding to cast votes against Biden's socialist progressivism

I want to start out tonight on an optimistic note tonight by connecting the dots between a beautiful stock market rally over the past month and virtually every polling survey during the same month showing that the cavalry is in fact coming.  I'm not saying there aren't any other factors in the stock rally. Of course, there are and I'm not saying that a Republican takeover of the House and Senate will solve all our problems, because it won't, but Joe Biden will still fight free market capitalism with his veto pen, unfortunately. 

However, I will say, if the polls are correct — and polls don't vote only voters vote — but if the trends are right, the GOP congress will at the very least stop the bad stuff or at least the new bad stuff. There will be a lot less spending, there will be no more tax hikes. Biden's anti-business regulatory regime will at least be slowed down and maybe most importantly, the GOP will probably start immediately on January 3rd when they takeover with an H.R. 1 and S. 1, House-Senate bill that will take the handcuffs off of oil and gas production and reopen the door to fossil permitting, pipelining, refining and all the rest of it. 

That's right. H.R. 1 and S. 1 could become a reality. Could it beat a Biden veto? Well, I don't know, but it might. Opening the oil and gas spigots will probably be the most important first step toward reducing inflation and a recession-ending growth plan that would liberate America's great fossil fuel industry. It would take the pressure off the Fed wouldn't it?  I mean how about J. Powell getting out there and publicly calling for congress to take the handcuffs of the fossil fuel industry and suggesting and hinting that the fed's interest rate assault would come to an end if Congress began a sensible energy policy?  Think about that. 

Biden's radical climate change strategy had been a total disaster and the cost of living in all of its forms is the number one issue in the midterm elections.  Even today we got a personal consumption price index report up 6.2% for the past year, core inflation up over 5% — both show worsening trends. Of course, the CPI is running above 8% and all in since Biden’s inauguration consumer prices have jumped almost 13% and we've discussed many times on the show the impact of fossil fuels in everyday life is enormous.  Not only for oil and gas prices, or the high-priced shortage of diesel fuel or the equally high-priced home heating fuel shortage, but clothes, toothpaste, laptops, diapers, baby toys, MRI's, stethoscopes, tents, tires, toothbrushes, you could go on and on. 

INFLATION GAUGE CLOSELY WATCHED BY THE FED SURGES AGAIN IN SEPTEMBER

But food prices have been badly impacted because fertilizers require fossils and grocery prices have increased over 17% since Joe Biden took office. So, in terms of conquering inflation and restoring prosperity, this hypothetical H.R. 1, S.1, first GOP initiative come early January might be combined with a Federal Reserve ceasefire for a quick turnaround from the stagflationary crisis in which we find ourselves. Is the stock market telling us that? Well, it might be. After all, stocks discount the future. They discount future profits, the future economy, future interest rates and even future politics. I've seen it work before. It could happen again.   

Now Joe Biden's out there on the campaign trail, once again trying to rewrite history. He is simply incapable of telling the truth about the economy. His so-called closing pitch argues that he inherited a deep recession. Of course, he never mentions inflation and now he's saying if you elect Republicans to Congress they're going to make everything worse. No, they're not, Joe. No one believes you and by the way, you inherited a non-inflationary boom from former President Trump's policies and in barely more than a year you turned the boom into a bust.  Meanwhile, real wages have been falling for 18 straight months for working folks and people are sitting around kitchen tables deciding to cast their votes against your socialist progressivism. 

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Incidentally, back to the stock market. Stocks love divided government and that's going to be one of the themes of the election outcome. I call it checks and balances. Three democratic houses have brought enormous damage to America’s national economy and national security. Folks want to put an end to that three-house majority. They don't like the economic policies, they don't like the soft on crime policies, they don't like the high cost of living policies, they don't like the open border policies and they don't like the cultural and social transformation policies in schools and elsewhere.  In short, folks want change. Checks and balances.

Now, is the stock market really such a great barometer? Well, most working folks nowadays own shares, one way or another, in retirement accounts and pension funds. Could be as many as 150 million people. That is a very big number. So, when stocks go down, it's really a vote of no confidence in America’s future. When stocks go up it's really a vote of new confidence in America’s future.  Until the last few weeks, investors have suffered a bear market, but as the polls have shifted toward the cavalry it looks like the investor class, which is a huge chunk of the working-class folks is gaining optimism. Am I making too much of the stock market story? Well, maybe. Just giving you some food for thought, but I do believe this stock market rally is celebrating the cavalry.  That’s my riff. 

This article is adapted from Larry Kudlow's opening commentary on the October 28, 2022, edition of "Kudlow."