A crazy guy calling another crazy guy crazy?
Sort of. But this must be the most public and bitter fight between the Fed and a president. Shows how badly Trump wants the markets to stay up.
Trump can just say no more trade war with China and market will move up 20% in a day.
By the way trade war makes inflation worse.
What’s inflation running at right now? Also, it used to be the fed avoided major policy changes near elections. Powell recently got very aggressive in his wording about future rate increases which has spooked the market. It’s less than a month from mid-terms.
It is a bit ironic, since Trump was so critical of Yellen now his pick is increasing rates faster.
Yes, Yellen was more steady. Not sure how this is going to play out though. What can Trump even do? Does the Fed chairman have the ultimate authority on the rates, or is it a vote by committee?
it is by vote.
Then I can see the other members pressured by Trump’s remarks.
The fed is supposed to be data driven. The data says inflation is super low. The problem is they are too out of touch with business to understand why. They are using the same models that were used decades ago before tech and global trade.
Core inflation is 2.2%, above Fed target. Both trade war and giantic corporate tax cuts are inflationary. You can’t wait until inflation flares up to slam the brake. 25 bps a quarter is not really hawkish by historic standard.
i thought you guys should expect volatility this month before election
rate increase, 10 yr treasury over 3
house/senate uncertainty during next mid term election
if i’m the democrat party, i would gather all billionaire(maybe soros and his buddies) to drag the stock down as much as i could before nov election. Try to destroy trump’s biggest strength . then a lot of votes will sway. take back the house/senate.
Curious (rather lack of knowledge), is it just the inflation that fed cares about? sounds rather limited. is asset inflation not a concern to them?
Inflation and unemployment is their dual mandate.
Tax cuts aren’t inflationary. If anything they are deflationary. They reduce a major corporate expense. The trade war with China is a very small percent of GDP. It’s a big headline but not important. Now that NAFTA is replaced, things will be calmer. EU is going to make concessions on trade too.
Tax cut is of course inflatinary. It’s the same as a fiscal stimulus. You inject more money into the system. More money chasing limited goods and workers.
China has been a huge deflationary force. Removing that will be hugely inflationary. We may not have seen the big effects yet as the tariffs just came on.
Trump’s biggest strength isn’t the stock market. The average voter barely has enough in equities to notice. Trump’s strength lies in the lowest unemployment rate in 50 years and a huge reigning in of the bureaucracy which matters in heartland states dependent on extractive industries. Other factors include the destruction of ISIS, the Norks no longer firing missiles into the Sea of Japan, the return of our war dead, and withdrawal from the Paris Accord which again would have placed the greatest burden on heartland states. Then there is the “culture war” - guns, illegals, AG’s siding with rioters, SC nominees, etc. A rising stock market didn’t help the Dems in the recent election cycles where they lost the house, the senate, a majority of statehouses and then finally the presidency and a falling market won’t help them this time around.
chain reaction, when stock market drops, forecast drops. hiring drop. spending drops…economy drops…
It’s $500B/yr of imports. That sounds like a ton but is small in a $18.5T economy.
I mean… sometimes it isn’t even funny…
In 1987 the market dropped 40% in a single week.
In 1988 GDP grew 4%.