Renowned economist Larry Kudlow says nervous investors should hang tough — because Monday's dramatic stock selloff is not a financial catastrophe, nor the beginning of a recession.
"I would stay calm, I would avoid panic selling … Try to take a long-term view," Kudlow said Monday on "The Steve Malzberg Show" on
Newsmax TV.
"Let me just say unequivocally right now, there is no catastrophe, there is no banking system collapse. In fact, I would argue there is not even a recession in sight at least for a couple more years. Those are basic bad things. I don't see it.
"A lot of this has come out of China and China is going to be growing more slowly and the communist central planning is actually hurting China. So I get that and you know you might want to avoid China."
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As well, the Federal Reserve is not going to raise rates in September, said Kudlow, a CNBC senior contributor and host of the nationally-syndicated radio program, "The Larry Kudlow Show."
"The American economy is sloppy. Profits are rising but slowly. The Fed should get out of the way. There'll be a time for them to raise rates, but this is not the time," he said.
"At some point the correction will come to an end.... Corrections can be very healthy and I want to emphasize that and I'm hoping people will take a longer term view."
On Monday, the Dow fell 588.47 points, or 3.6 percent, to 15,871.28. The S&P 500 index plummeted 77.68 points, or 3.9 percent, to 1,893.21. And the Nasdaq composite slid 179.79 points, or 3.8 percent, to 4,526.25 points.
The day's totals ended after a frightening rollercoaster ride on Wall Street that saw the Dow Jones industrial average briefly plunging more than 1,000 points
Kudlow said he was not impressed by the financial ideas of either presidential frontrunners Hillary Clinton and Donald Trump, neither of whom he believes are pro-growth enough to jump start the lackluster American economy.
"Hillary … wants to double the capital gains tax. I can't think of anything stupider. This unhelpful, anti-growth," Kudlow said.
"Trump is talking about a trade war with China and Japan and with Mexico. Trump is talking about devaluing the dollar substantially, and then deporting 11 million illegal immigrants. None of that in my opinion is helpful.
"I'm just saying the political backdrop – I know it's early – is not healthy for our stock market."
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