A little “Simple Twist of Fate”.
For months, POTUS railed against Fed chairman Jay Powell telling him not only was his committee’s idea to raise rates 3-4 times in 2019 a preposterous, ludicrous, horrible bad idea but also he should do the exact opposite & cut interest rates by a sizable amount. Pundits & bond traders howled at the lack of couthness by Mr. Trump – it’s bad form to tell the top central banker what to do, history indicates – but the president as usual disregarded those protestations & kept hammering away at the increasingly beleaguered & isolated Mr. Powell.
By early spring all rate hikes were off the table as the stock market rejected that medicine; and by late spring the fixed-income desks were rejoicing a new round of cheap, easy money – forever.
Today Mr. Powell not-so-subtly told the president – if you want a cut, keep messing with China. You’ll drive the economy off a cliff in the process, but if that’s your prerogative, have at it.
From Bloomberg: “Referring to “trade negotiations and other matters,” Powell said Tuesday in Chicago that “we do not know how or when these issues will be resolved.” Powell left the door open to rate cuts. And told Mr. Trump in no uncertain terms: the ball is in your court, sir.