‘POISED FOR TAKEOFF': Economist makes BOLD call

[00:00:00] Speaker 1: FIRST UP, WE HAVE A BOOMING ISM MANUFACTURY NUMBER OUT TODAY. IT'S THE THIRD OR FOURTH STRAIGHT MONTH, BY THE WAY, 54.0. NOBODY WANTS TO PAY ANY ATTENTION TO THAT. EVERYBODY WANTS TO BE BEARISH ON THE ECONOMY. THEY'RE WRONG. BY THE WAY, PRODUCTION WAS UP. NEW ORDERS WERE UP. JOBS WERE UP. EVERY DARN THING WAS UP. THE ECONOMY IS MUCH HEALTHIER THAN PEOPLE THINK DESPITE GASOLINE PRICES, THE TEMPORARY POP-UP IN ENERGY. ANYWAY, LET'S BRING IN ART LAFFER AND STEVE MOORE AND DAN BRIETTE TO TALK ABOUT ALL THIS THING. ART LAFFER, I'LL START WITH YOU. EVERYBODY'S PESSIMISTIC. EVERYBODY'S PESSIMISTIC. I WATCH SUNDAY TALK SHOWS A LITTLE BIT. PESSIMISM, TERRIBLE, THIS AND THAT. THESE NUMBERS KEEP ROLLING. BUSINESS, ARTHUR, BUSINESS HAS NEVER BEEN BETTER. DURABLE GOODS ARE BOOMING. THE ISM MANUFACTURING IS BOOMING. JOBS ARE BOOMING. BUSINESS CAPEX, PROFITS, PRODUCTIVITY, ARTHUR. WHAT THE HECK IS WRONG WITH PEOPLE? WHY DON'T THEY GET IT? [00:00:55] Art Laffer: WELL, YOU CAN JUST SAY STOCK MARKET IS DOING WELL. I THINK THE WHOLE ECONOMY IS JUST POISED FOR TAKE OFF, LARRY. I MEAN, EVEN WITH TODAY'S SHARP INCREASE IN THE PRICE OF OIL, THE STOCK MARKET IS STILL UP. BOTH NASDAQ, S&P AND THE DOW. I MEAN, IT ALL IS POISED THERE. WITH KEVIN WARSH NOW HAVING BEEN SWORN IN. THE WORLD LOOKS REALLY POISED TO ME. I THINK THE PRICE OF OIL IS GOING TO FALL BY A LOT ONCE THIS IRANIAN THING IS. AND THE IRANIANS THINKING THAT THEY'VE GOT TRUMP OVER THE BARREL BECAUSE OF THE MIDTERM ELECTIONS, THEY JUST DON'T KNOW STRAIGHT UP FROM SICKHAM. TRUMP IS NOT OVER THE BARREL. ONCE THOSE ELECTIONS ARE DONE, HE'S GOT AN OPEN FIELD RUN TO DO REALLY GREAT STUFF. I COULDN'T BE MORE EXCITED THAN I AM. [00:01:35] Speaker 1: WELL, I THINK THE POLICY OUTLOOK IS VERY, YES, IT'S VERY, VERY POSITIVE. YES. BUT I JUST THINK IT'S INTERESTING TO ME, STEVE MOORE, THAT RAMPANT PESSIMISM, WHICH IS PROMOTED BY THE MEDIA, PROMOTED BY DEMOCRATS, MAYBE SOME REPUBLICANS, BECAUSE OIL PRICES HAVE JUMPED UP, THEY BUMPED UP TEMPORATE. BUT THE NUMBERS DON'T BEAR THAT OUT. AND, YOU KNOW, BUSINESS IS IN VERY GOOD, PROFITABLE SHAPE WITH LOWER TAXES AND DEREGULATION. BUT, LOOK AT THE NUMBERS, STEVE MOORE. THAT'S THE POINT. PEOPLE DON'T TAKE THE TIME TO LOOK AT THE NUMBERS. [00:02:11] Steve Moore: YEAH, WELL, WE'RE BLOWING AWAY THE REST OF THE WORLD, TOO, LARRY. WE'RE GROWING FASTER THAN EVERYBODY ELSE. LOOK AT OUR STOCK MARKET COMPARED TO CHINA. WE ARE WINNING BECAUSE OF TRUMPANOMICS, NO QUESTION ABOUT IT. I WOULD JUST ADD TWO POINTS TO WHAT ARTHUR LAPTER JUST SAID AND THAT YOU JUST SAID. THE INVESTMENT NUMBERS, I JUST LOVE THOSE, LARRY. I MEAN, WE'VE NEVER SEEN SUCH AN INVESTMENT BOOM IN THIS COUNTRY MAYBE EVER GOING ON. AND THE SECOND ONE IS, AS YOU KNOW, IT UNLEASHED POSPERITY. WE'RE MONITORING EACH MONTH THE CENSUS BUREAU NUMBERS ON WHAT'S HAPPENED TO FAMILY INCOME. I'M GOING TO GIVE YOU THE SCOOP ON THIS. SO WE JUST DID THE APRIL NUMBERS. SINCE TRUMP CAME INTO OFFICE IN THE SECOND TERM, ABOVE INFLATION, THE AVERAGE FAMILY HAS $3,100 MORE OF INCOME. SO EVEN THIS AFFORDABILITY CRISIS IS KIND OF OVERRATED. PEOPLE HAVE MORE DISPLOSABLE INCOME TODAY THAN EVER. [00:03:00] Speaker 1: 100% RIGHT. BY THE WAY, ORDERS AND SHIPMENTS, BUSINESS ORDERS AND SHIPMENTS, OVER 10% ABOVE A YEAR AGO. PROFITS SIMILING. ANYWAY. DAN BRIETTE, HERE'S A QUESTION FOR YOU. 70 SHIPS, I DIDN'T KNOW THIS. I'M READING IN THE NEWS. 70 SHIPS, COMMERCIAL SHIPS, HAVE ACTUALLY GOTTEN THROUGH THE STRAIGHT OF HOMUZ. SO THERE'S A LANE OPENING UP, I GUESS, THE CHANNEL NEAR OMAN, IF I HAVE THIS RIGHT. NOW, GAS PRICE, LET ME START WITH ENERGY. ENERGY PRICES HAVE COME DOWN. BRENT AND WTI, WEST TEXAS, HAVE BOTH COME DOWN, AND SO HAVE GASOLINE PRICES. IS THERE A THALL GOING ON, DAN BRIETTE, AND ARE WE INCHING OUR WAY TOWARD SOME KIND OF REOPENING OF THE HOMUZ STRAIGHT? [00:03:45] Dan Brette: WELL, I HOPE SO, LARRY, I THINK IF YOU LOOK AT THE FUTURES CURVE, AS MIKE WORTH HAS POINTED OUT A COUPLE TIMES, IT DOES SHOW OIL PRICING GOING DOWN IN THE LONG TERM. NOW, THAT BEING SAID, THERE MAY BE SOME SHORT-TERM BUMPS, AND WE'LL START TO SEE THOSE OVER THE COURSE OF THE NEXT TWO, THREE, PERHAPS FOUR WEEKS, AS STORAGE NUMBERS START TO DECLINE. BUT, LOOK, I THINK WHAT YOU TALKED ABOUT EARLIER IS AN AMAZING ECONOMY. YOU KNOW, THE MANUFACTURING NUMBER IS ASTOUNDING TO ME. I THINK IT ACTUALLY MAY BE THE FIFTH STRAIGHT NUMBER WHERE IT'S, FIFTH STRAIGHT MONTH WHERE IT'S, IT'S UP, YEAH. [00:04:14] Speaker 1: S&P GLOBAL, S&P GLOBAL IS PROBABLY ABOUT FIVE MONTHS. THIS IS THE ISM. BUT, YES, GO AHEAD. [00:04:19] Dan Brette: THAT'S RIGHT. AND WE'RE LOOKING AT, WHAT, 18, 19 MONTHS OF OVERALL ECONOMIC EXPANSION HERE? I MEAN, IT'S BEEN A PHENOMENAL RUN. AND, YOU KNOW, THE CHALLENGE FOR US IS TO GET BEYOND THIS HORMOOZ STRAIGHT ISSUE BECAUSE ENERGY PRICES ARE THE FLOOR FOR ALL OF THIS INCREASED PRICING THAT WE'RE SEEING IN THE MARKETPLACE RIGHT NOW. SO, ONCE THE STRAIGHT GOES AWAY, THIS CHAIR IS PULLED OUT FROM UNDER THIS TABLE AND THOSE OIL PRICES COLLAPS AND THIS ECONOMY TAKES OFF EVEN FASTER. SO, YOU KNOW, I THINK IT'S AN EXCITING TIME FOR THE ECONOMY. I FEEL A LITTLE BIT OF PRESSURE, THOUGH, FOR KEVIN WARSH. HE'S GOING TO HAVE HIS HANDS FULL BECAUSE THESE NUMBERS ARE JUST AMAZING. [00:04:55] Speaker 1: YEAH, BUT, WELL, THAT'S GOOD. YOU KNOW WHAT? IT IS GOOD. IT IS GOOD. WE'RE RUNNING OUT OF TIME. BUT I WANT TO GO BACK. ART LAFFER, GOOD NEWS IS GOOD NEWS. YOU KNOW WHAT? UNIT LABOR COST, BY THE WAY, UNIT LABOR COST IS 1.2% YEAR-ON-YEAR. SO, THAT'S JUST LOW. BUT, ARTHUR, WHY SHOULD THE FED? THE FED SHOULD RAISE RATES NOW? THE FED SHOULD TIGHTEN? I DON'T THINK SO. [00:05:18] Art Laffer: I DON'T THINK SO, EITHER. I THINK THEY SHOULD FOCUS ON A PRICE RULE. THAT'S THE WAY THEY SHOULD GO. AND GUARANTEE THAT PRICES STAY STABLE. AND INTEREST RATES WILL FALL ON THEIR OWN ACCORD ONCE WE'VE GOT INFLATION UNDER CONTROL. ONCE THOSE OIL PRICES ARE DOWN, AND THEN IT'S OFF TO THE RACES. AND I THINK KEVIN'S JOB SO FAR HAS BEEN SHOWN REALLY TO BE GOOD BECAUSE OF THE FALL IN THE PRICE OF GOLD. I DON'T KNOW IF YOU SAW HOW FAR IT FELT TODAY, BUT, WOW, JUST PLOP. AND THAT'S A GOOD SIGN FOR THE ECONOMY. [00:05:45] Speaker 1: MAYBE THAT'S WHY THE GOLD GUYS DON'T ADVERTISE ON RADIO ANYMORE, STEVE. THE GOLD PRICES ARE GOING DOWN. THE WHOLE THING IS A DISASTER. ANYWAY, WE'LL LEAVE IT THERE, GENTLEMEN. SORRY WE'RE ALWAYS TIGHT. STEVE MOORE, ART LAFFER, DAN BRIETTE.