◼ ECONOMICS Bloomberg Businessweek March 9, 202027ILLUSTRATION BY KATI SZILAGYI
lived with this for decades—they just never work.”
On the wall behind him hangs a framed copy
of a 2018 Kudlow speech headlined “The Trump
Economy,” overwritten with the unmistakable black
Sharpie autograph of the president and the decla-
ration “Larry, So great!” On the wall facing him is a
gilt-framed canvas of a vase holding a bouquet pains-
takingly rendered by his wife, Judy, a realist painter.
There are printouts of emails and briefing binders
on the table before him and newspapers on the cof-
fee table across the room. But nowhere in sight is a
television that might relay investors’ skeptical reac-
tion to the Fed’s emergency rate cut. Or a computer
to track the indexes trending down.
The only screens on view are a pair of smart-
phones. When one buzzes, Kudlow picks up. It’s
Treasury Secretary Steven Mnuchin. Powell has just
held a press conference, he informs Kudlow, who
seems unaware: “Was it a presser this morning? I
didn’t see.” An aide chimes in: “He said the econ-
omy is strong.” Kudlow tells Mnuchin, “He stayed
with our line: The market is fundamentally strong.”
“He’s a good friend and policy ally,” Kudlow says
of Mnuchin after the brief exchange. In an age of
manic news cycles and whipsawing markets, this
is how the 72-year-old Kudlow works. He’s an old-
world, social-media-free optimist in pinstripes who
describes almost everybody as a “friend” or “pal,”
even when he’s delivering a political jab. “Biden?
Bernie? Biden is Bernie lite as far as I can tell. I’m
disappointed in Joe, who was a friend of mine,” he
says as he ruminates on the economic debate tak-
ing shape before November’s presidential election.
As Trump squares up for a reelection bid that
leans heavily on an economic expansion that, until
recently, looked unstoppable, Kudlow occupies a
special place in the administration. He’s waged eco-
nomic policy battles, pushing for a truce in the trade
war with China, and taken a stand against such ideas
as intervening in currency markets or imposing tar-
iffs on cars imported from Europe. But his most
important role has been that of market magician.
The president praised his powers at the January
signing of a “phase one” trade deal with China. “We
had a day where the market went down $1 trillion.
Think of that,” Trump told a gathering of chief exec-
utives and luminaries such as Henry Kissinger. “But
Larry Kudlow went out onto the beautiful lawns
of the White House,” the president said. “And he
started talking. And by the time he finished, I said,
‘You just made a trillion dollars. A trillion.’ Because
the market went up like 250 points. I said, ‘Larry,
what the hell did you say?’ ”
Kudlow, a former TV host on CNBC, is more
humble about his abilities. “I appreciate Presidentlinking their fortunes to financial markets, as Trump
explicitly has, says Fratto: “They’re outside of your
control. They’re very fickle. And you don’t want that
as the measuring stick for how you are doing.”
Peter Borish, chief strategist at Quad Capital, says
Kudlow’s positivity has become a sort of trap. “It’s a
no win situation,” he says. “He needs to be an opti-
mist because people will discount anything he says
that is positive and will accent what is negative.”
Kudlow says all he’s doing is trying to keep
investors focused on the big picture. “I’m there
just to remind folks of President Trump’s growth
policies and our generally constructive long-term
outlook,” he says. “The seesaw was so crowded at
the bottom. I was just trying to say things are more
balanced than that.”
Kudlow says he can’t help but be upbeat.
“Pessimism has never truly set well with me; as
though bound by a shirt collar that was too heav-
ily starched, it made me feel uneasy and irascible,”
he wrote in the introduction to his 1997 book,3.4k2.7k2.0k40200
1/20/17 3/3/20Kudlow’s tenure Kudlow’s tenure1/20/17 3/3/20
DATA: COMPILED BY BLOOMBERGNavigating Troubled WatersS&P 500 CBOE volatility indexTrump’s support, but my influence on markets is
vastly overrated in this building and anyplace else.”
Kudlow is also conscious that his efforts to talk up
the markets—especially in recent days as he’s repeat-
edly urged investors to “buy the dip”—have left him
open to criticism from those who say the White
House shouldn’t be offering investment advice to
the American people.
“It probably hurts his credibility to have been
in that situation in which he is talking about peo-
ple should go out and buy and we have literally the
worst week ever,” says Tony Fratto, who served as
a White House and Treasury Department spokes-
man during the administration of President George
W. Bush. There’s a good reason presidents avoid