National Economic Council Director Kudlow on November jobs report

First On CNBC: CNBC Transcript: National Economic Council Director Larry Kudlow Speaks with CNBC’s “Squawk on the Street” Today

National Economic Council Director Kudlow

Image source: CNBC Video Screenshot

WHEN: Today, Friday, December 6, 2019

WHERE: CNBC’s “Squawk on the Street

The following is the unofficial transcript of a FIRST ON CNBC interview with National Economic Council Director Larry Kudlow on CNBC’s “Squawk on the Street” (M-F 9AM – 11AM) today, Friday, December 6th. The following is a link to video of the interview on CNBC.com:

Watch CNBC’s full interview with NATIONAL ECONOMIC COUNCIL DIRECTOR Larry Kudlow after a robust November jobs report

All references must be sourced to CNBC.

JIM CRAMER: Hey, is Larry on?

CARL QUINTANILLA: We have been having a couple of camera issues, but I think we do have him on the phone. On the jobs report this morning, of course, if you missed it, Labor did say November payrolls up by 266,000. Joining us on the phone with his first reaction from the White House, National Economic Council Director Larry Kudlow. Larry, happy Friday. Good to see you. Or, at least, talk to you.

LARRY KUDLOW: And to you, Carl. Thank you very much.

CARL QUINTANILLA: So, help our viewers understand the strength of the number, knowing that we had GM and Census sort of clouding the picture, at least going into the print.

NATIONAL ECONOMIC COUNCIL DIRECTOR LARRY KUDLOW: Oh, look, you know, those numbers up one month, down another, cancel each other out. It is a push. I mean, look, the basic theme here, America is working. America is working. And, by the way, the middle-class workers are working. We’ll get to their jobs, not just their jobs, but their wages. But you scoring 266,000 and, Carl, don’t forget, abstracting from all these things regarding the Census Bureau and the GM strike, you have plus 41,000, plus 41,000 on the revisions

. So, actually you’ve got another 300,000 jobs month, if you will. 301,000 or whatever it is. These are very big numbers and the interesting thing is on a trend line, you know, you chart your three-month movement, it looked like the economy was softening on the jobs front, now the jobs front is coming back.

That is showing more strength. And I’m thinking you’re going to see a CapEx business investment follow through. And, of course, we know the housing industry is very strong, as the Fed finally got straightened out and caught interest rates. Bottom, bottom line, America is working, these are very strong numbers. These are happy numbers, Sunday, Friday numbers. Sunny and Friday numbers. Happy working Americans.

JIM CRAMER: Larry, in all the years — this is Jim, I worked with you, a great pleasure, you’re a great economic historian, too. People don’t know that. Can you contrast this versus 50 years ago? Because isn’t this number a very, much better number than we were at this — when we were at these levels 50 years ago?

LARRY KUDLOW: Let’s see. 50 years ago, you want to put me back into where, the 70s or–we haven’t quite—the 80s?

JIM CRAMER: Into stagflation, Larry. We were going into — we had higher interest rates, we went into recession, we had terrible inflation. Do we have any of those things right now?

NATIONAL ECONOMIC COUNCIL DIRECTOR LARRY KUDLOW: No. I mean, it is really interesting to me. So, you’re at 3.5% unemployment, dropped down at 6. Inflation, you know, by the Fed’s numbers, what, 1.4, 1.5%. So, let’s get this right. 3.5% unemployment is how much? 50-year lows, some odd.

And at the same time, the inflation rate is about 1.5., 1.4%. You know what is very cool here? We are having growth and jobs and wages—maybe we’ll get to the wages in a moment. And we are having all those solid growth prosperity things, without any inflation. We have a steady reliable, dependable dollar, which I think helps a lot. And so, all these Philips Curves are broken, Jimmy.

It almost doesn’t matter. If – if the unemployment rate were 10, the inflation rate would be 1.5. The good news is the unemployment rate is 3.5 and the inflation rate is 1.5. And I think over a couple blocks from where I am, in that big building with all those econometric models and hundreds of thousands of PhDs, I think they’re finally figuring out that more people working successfully is a good thing, not a bad thing.

JIM CRAMER: It’s okay if you want to raise inflation, too.

LARRY KUDLOW: Right. I don’t want to – I don’t want to be brash, Jimmy, I don’t want to go out on a limb, but you’ve heard this before.

JIM CRAMER: You bet.

LARRY KUDLOW: More Americans working, it is a good thing, not a bad thing.

JIM CRAMER: Okay then, Larry, why does nobody – why do so few people in the country know that the stock market is doing so great? You and I saw those numbers yesterday. Weren’t you astonished how few people know how good things are?

NATIONAL ECONOMIC COUNCIL DIRECTOR LARRY KUDLOW: Well, I don’t know. It’s kind of the times we live in. You know, you and I kind of play the optimistic side. You and I always take the Pro-American side. It has a lot to do, I think, with who we are and who our fathers were working in World War II. For some reason, we don’t have those attitudes. But I don’t want to get, you know, at the personal level, Jimmy. It is what it is. It is a very, very good story. Headwinds, you know, we had the Federal Reserve, way, way, way too tight in 2018.

But I think now that’s going away. They took their foot off the brake. I notice the balance sheet of the Fed is rising again, I think the monetary base in M2 are up about 14%. So, that’s good. We are not going to get any help from Europe. Alright. That’s regrettable.

On the other hand, we are cooking up very close to two powerful trade deals. When I say powerful, not only are they well-crafted and will open the door for American exports because we’re the most competitive in the world, but it will add a lot to GDP. In fact, you know what, Jimmy? I was just noodling yesterday: China, phase one, probably could be half a point or more, GDP next year. USMCA could be half a point or more next year. So, that’s really something. So, I’m playing it on the optimistic side.

DAVID FABER: Larry, it is David. Taking you up on that discussion of trade, you know, you joined us, I think it was November 12th, or joined CNBC. And you were saying then a deal with China is close. Is it still close? And can we expect the tariffs to hit on the 15th of December as still planned?

NATIONAL ECONOMIC COUNCIL DIRECTOR LARRY KUDLOW: Well, let me say this, the deal is still close. It’s probably even a wee bit closer than when I first made that statement in November. But I will say, with the statement, as you know the President this past week in both London and Washington –POTUS is saying the deal is moving along very well. We’re having good discussions with China. You probably know, the deputy level met again. I don’t know yesterday or the day before yesterday. POTUS again said we’re moving along in the right direction.

Now, he’ll say, of course, it’s got to be a good deal. There’s a few buttons that have to be buttoned, and they’re working on that. As you might guess, I can’t speak specifically on the remaining issues. But the reality is constructive talks, almost daily talks.

We are in fact close. Which is back to your question on December 15th, David, there’s no arbitrary deadlines here, okay? There’s no arbitrary deadlines. But, the fact remains that September 15th is a very important date, with respect to a no-go or a go on tariffs. These are Presidential decisions, David. I can’t make them here. I’m not even going to forecast them here. It’s going to be totally up to POTUS. But December 15th is an important date.

CARL QUINTANILLA: You know, Larry, these takes often get marked by a phrase. It was “final lapse” by Mnuchin in May, it was “short strokes” with you on November 15th. Are we still in a “short strokes” phase? Or what phrase would you use to describe talks right now?

LARRY KUDLOW: Um, intense. I’ll–

DAVID FABER: Okay. I like that.

NATIONAL ECONOMIC COUNCIL DIRECTOR LARRY KUDLOW: I mean, I say “intense” because this is a very important matter. As we’ve discussed many times, with you fellas when I’ve been down here, the President has changed the narrative on China. He is defending the country. He is defending the American worker. And he is defending the farmer. He is defending the manufacturer. And, unfair trading practices that have been used by China for many years, President Trump will not tolerate that. That’s why I use the word “intense.” This is a very important matter. Now, the President said, I think when he was in London just before he left, that—correctly pointed out the U.S. economy is rising and in good shape.

The Chinese economy is declining and in bad shape. On the other hand, he has said we’re getting close, the talks are constructive, and if we can make a deal that works for both sides, we’ll make a deal that works for both sides. You can’t put any guarantees on it. I would stay with “short strokes,” but I would add the word “intense,” because there is so much at stake here, when you go through the various categories.

I mean, Jimmy Cramer, you above all people know, you — the most encyclopedic stock market guy there is, technology and inventions and innovations in technology are the driving force, the creative, dynamic force, that makes the American economy the best in the world. So, Jim, we can’t he afford — we must not permit any country, China or whoever, to Willy-nilly steal our breakthroughs in technology, in advanced micro-processing, and you know, related to 5G.

We can’t let that happen. And so, the President is sticking up for – not just for farmers and car – auto-workers and manufacturers which includes by the by finance services sector. The President is sticking up for people in the technology sector, which includes by the by, the financial services sector. So, that’s another part.

When I say “intense” I’m saying the growth implications here could be terrific, okay? The diplomatic implications could be good, although we worry about national security. But, in straight economic terms, when you get right down to it, our family jewels are the technological inventions and innovations and applications that, you know, are God-given rights to practice. And we just can’t let other countries steal it. We can’t let them steal it.

JIM CRAMER: Larry, I can’t agree with you more. I think we have to be willing to walk away if they keep stealing, Larry, if they keep stealing our IP. Can’t we just walk away and win the trade war? Not compromise, but win.

LARRY KUDLOW: Well, I would tell you this. The President has said many times, if the deal is no good, if the assurances–with respect to preventing future theft–are no good, if the enforcement procedures are no good, he has said we will not go forward. We will walk away. He has said that. He agrees with, at least, the spirit of what you’re saying. But as a very clever and tough-minded negotiator, you know, he will use the tariffs, but he will use the negotiating table. You know. He’s using both. We’ve got two of the best, my colleagues Bob Lighthizer and Secretary Steven Mnuchin.

They’re working the front lines. Our whole trade team is involved. So, you know, your point is well taken, and the President has said that. If we cannot get the enforcements, the assurances, then we will not go forward. Now, I don’t want that to sound bearish. That’s not my intent. I’m merely responding to your point. You know why? I’ve got to get you down here. You need to come and sit with President Trump for 30, 40 minutes to talk about this.

JIM CRAMER: Done. Done.

NATIONAL ECONOMIC COUNCIL DIRECTOR LARRY KUDLOW: Let me work on that and put that together. He is a great admirer of yours. And he loves your spirit on the China story. So, I’m going to get that together.

JIM CRAMER: Thank you. We’ll do it.

CARL QUINTANILLA: Just make sure we get him back, Larry.

JIM CRAMER: I’m available.

LARRY KUDLOW: You may never – if I get my pal, former partner Jim Cramer down here, you may never see him again, Carl. Who knows?

CARL QUINTANILLA: That’s what we’re afraid of.

JIM CRAMER: Well, you’re my friend from way back. Thank you, Larry.

DAVID FABER: — we know it.

JIM CRAMER: “Kudlow and Cramer.” And we killed it.

CARL QUINTANILLA: –D.C.–

JIM CRAMER: Thank you, Larry, that’s very kind.

CARL QUINTANILLA: Larry, thanks.

JIM CRAMER: Very kind.

NATIONAL ECONOMIC COUNCIL DIRECTOR LARRY KUDLOW: All good. Take care. You bet.

CARL QUINTANILLA: Larry Kudlow. Director of the National Economic Council.

JIM CRAMER: I wish my dad were alive. He would love that. He loved Larry so much.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q3 2019 hedge fund letters, conferences and more



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver