It's surreal. And it's joyous. I am talking about my opportunity to interview old friend Larry Kudlow on Squawk on the Street this morning.
Larry's now the president's chief economic adviser, a terrific honor, well deserved. I worked with Larry on a CNBC show on Kudlow & Cramer that ran for three years and Larry's an inspiration on so many fronts. But the most important two Larry Kudlow stances? Growth cures all and be an optimist because optimism is rewarded in the stock market and life.
Both views were on display during our interview and they pushed the marker up rather dramatically when they were explained.
Now, I know what you are thinking: there's a Trump ceiling and a Trump floor. The ceiling? Trump's angry war of words about world trade and how China's just a plain bad actor that better change its ways or else, whatever else might be. The sudden call for $100 billion in additional tariffs last week came out of nowhere and unsettled a market that seemed to be holding its own.
Then there's the Trump floor, a floor which amounts to Larry Kudlow coming on air and reminding us that nothing's a done deal, that there are ongoing negotiations and he's confident things will work out in our favor.
When he says it, as he did last week before Trump's $100 billion riposte, the market bottoms and u-turns, same as today.
The question is, are we done with the saber-rattling moments that have put a ceiling on the stock market? Larry made us feel that we are. He made us feel that way because he explained how even though he has been a free trader all his life because it is pro-growth, something that he taught me during our Kudlow & Cramer stint, China will be a hindrance to world growth unless it starts playing ball. In other words, tariffs can be consistent with is pro-growth view if they open a market, something he plainly thinks will happen.
Now we don't know if the Trump ceiling got a little lift today when Trump blamed our own past leaders more than President Xi for our terrible trade deals. We also don't know how much the decision by the Chinese to stop selling items to North Korea that can be used for weapons -- a statement that came out this weekend -- is triggering a Trump-like olive branch.
I think all of us are concerned that the Trump ceiling seems to pop up so unexpectedly that the market's become un-investible. But I thought Larry's floor might be as strong as Trump's ceiling which means that the Trump inspired dips can be bought knowing that Larry will be right there to remind us that we should be more optimistic than we have been about the Chinese negotiations. There was a discordant note when Larry said the stock market's been doing fine during this period. I can't agree with that now matter how optimistic I am trying to be.
Still, though, we have to remember that Larry said Trump's push against China "is a good exercise that will lead to better growth."
If that's the case, we should stop fearing Sunday night's -- when China tends to issue policies -- and maybe embrace what could turn out to be a situation that's better for the American status quo. Or, to put it another way, As Mark Sebastian, our VIX expert noted on Friday, the fear index went down as the averages went up, a positive market divergence that shows there's been too much worry about China and earnings.
Don't believe in the Trump floor? You are going to miss out on terrific rallies like today. I say build the words of my old partner into your thinking, and don't stop being skeptical but stop allowing despair to be the watchword of your portfolio.
