If anyone can shed some light on this I'd love to hear it.

Assuming Trump was right to take on China then I think he is right to argue that Powell should not be marching towards higher rates. And Powell does seem determined to me.

But, the Fed is independent...So who are its stakeholders? The president appoints the Fed chair but then the Fed acts as it will? Doesn't seem too independent if the president can fire the chair whenever he wants.

I think its a mistake to raise rates, while the US is so dependent on deficit funding, while engaging in a trade war with China.

These are long term moves that can require more than two terms to be done correctly. But we should not have rocked the boat with rates will engaging China. Or vice versa, we could have let China do its thin and gotten our house more in order.

Doing both at once...markets look like they are calling someone's bluff.

If we burn, you burn with us?

Thoughts?

trump can't fire powell

Ha ok interesting. I could swear I heard an interviewer ask him if he was going to fire Powell. Or he said that he wouldn't or something.

But he does appoint him?

He can remove him for cause, but not at will.

But yeah, Trump said he didn't intend to fire him.

A better thread would be to ask why engage China in a trade war in the first place.

Ford is wondering.

Its a stupid title for a thread. Right and wrong and black and white, is not the way this stuff works.

Also, its clear to anyone who has been paying attention, that this was just a classic Trump tactic to divert attention and blame to someone other than himself when theres bad news for him (the huge down day in the market, that hes been taking credit for lol)


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Yeah, maybe it wasn't a great title. It was just how I was thinking about it.

My point was basically the opposite of yours though. I don't think he is just deflecting. I think he is right. At least, from his perspective. From his (Trump's) perspective, he was right to take on China.

Given that, Powell was wrong to raise rates and do it with the tone he did. It feels like he wants to go 25 BPS a quarter until we are at like 5-8% +.

The lay of the land is different since the last hike. It is not, as the stupid theories say, just about unemployment. Nor is it just about the price of SPX. Its a complex system...

We went from a dove (actually, multiple accommodating chairs) to a hawk. Gotta think we can expect a hard landing now...

I'm a little younger than Powell, but I would consider rates in the 5-8% range "normal". At least that is what they were when I grew up. Maybe he's anchored in the past.

I certainly wouldn't mind rates getting to 5%. I think they need to get there so the Fed can have tools to fight the next crisis with.

I think you are right. 5-8 is normal and 5 is a mental default for me. Like when pricing a mortgage or something.

My issue with it is the context. If we were all making love not "war" globally I'd be all for raising.

But if the market has become addicted to the "crack" of near zero rates (for what, like a decade...), and it has become fragile given US/China relations, and is legitimately concerned about escalation...does it really make sense to further rock the boat by raising (and raising with tone they did?).

Imagine you have just sailed through a storm (2008) but returned to smooth waters (new all time highs). But now the water is getting kind of choppy (new President w/ big ideas and moves to be made...China / US confrontation...).

What do you do? Batten down the hatches and stay seated in the middle of the boat? Or do you go to one side of the boat...and potentially start jumping up and down?

...what happens to the boat?
...what happens to the world if you capsize the boat?

I don't think raising rates will be bad for any of reasons you listed. I suspect the real reason that raising rates will hurt the US Government and the economy is we will have to start paying interest on the massive budget deficit. That is really going to hurt.

Might cause repeal of the Trump tax cuts and military spending increase. Bonds rates (and inflation) are going to be pretty high when we have a $3TT deficit during the next downturn.

If Trump is right, then taking on China won't cause your metaphorical storm.

As a small aside, Powell isn't raising rates dramatically. He has been signalling that he is going to continue to raise rates slowly as the economy warrants it. He will adjust his outlook (if needed) as additional data comes in because he isn't an idiot.

Yeah, thats sort of what I am getting at in the thread. I dont think taking on China in a vacuum would have caused the storm. IDK, I suppose it could depending on how it does or does not escalate.

But I think the market is reacting to the interplay between rates and taking on China.

It just seems to me that it would be better to do one at a time. One or the other. If the market perceives Powell as being a hawk and the risks with China as having the potential to escalate...then the selling makes sense to me.

Do you see what I am getting at? One at a time. What do you think? I think if we didn't have these artificial rates and the economy really was strong that taking on China would be fine. Probably would have been fine without raising rates and doing so the way Powell did.

Doesn't seem fine to me. Im long sort term and we are bouncing over night, but that was nasty selling.

I understand what you are saying, but (again) if Trump is right then there is no storm and the market has been happy and fine. If the market is reacting poorly to Powell raising the overnight rate at the extremely slow rate that it has been rising and is expected to rise based on Powell's statement, then Trump is wrong.

If your thesis is that Trump is right about taking on China right now, then the Fed acting like a normal Fed (raising rates in a reasonably slow manner in response to normal inflation) is perfectly fine. If taking on China requires the Fed to act weird and not raise rates, then Trump is wrong.

You cannot have it both ways in your head.

Trump is a loser ahole by default due to all his attributes or lack of ethical and intellectual leadership. History will punish him. The real question is if it will punish America together with him. Last chance ladies and gentlemen before the twilight zone is on for good.

I think you are saying that Trump should have taken into account how the Fed might act and the repercussions of those actions.

And what I am saying is that Powell should have taken into account how Trump had already acted and the repercussions of his actions.

I wasn't saying that Trump was right to take on China. I was just saying that I think he was right to point out that Powell should not have raised rates.

This is why I was asking who the Feds stakeholders are? Something that I still lack clarity on. Is it the American people? American banks? Global banks?

Seriously?

Youre putting the cart before the horse. Go buy some silver...

I'm not saying that at all. I am saying that the Fed is acting presicely as it should be acting, and that it is also acting precisely as it should. Granted, this is just saying the same thing twice.

Ha, definitely this.

So the question remains, who are the Feds stakeholders?

Obviously to some degree the answer to the president. But beyond the mandate of 2% inflation and 2% unemployment...whom do they serve?

They have a dual mandate that they serve. It is generally believed that if they follow their mandate that the economy will be a bit healthier than if they didn't. They are supposed to be independent.

Of course, their stakeholders are the Deep State and the Clintons. That is why they manipulate precious metals and failed to stop 9/11 from happening.

Ha, was looking for a serious answer to the later. Im aware of the dual mandate. It sounds to me that you are implying that they server the American people and the American economy through the dual mandate (and the assumption that 2% inflation is desirable, I think its pretty lear that low unemployment is desirable).

But whom they serve and their actual stake holders are not necessarily the same thing. Do they make money (as in returns)? Obviously they know where the print button is.

If they buy a **** ton of treasuries, do they pay taxes on the income?

I wonder what wisdom Brian would have been doling out in 2007?

This "experts know best, it's all goldilocks 'just right'" is pretty dumb, man.

One thing I am getting at is if the Fed makes money, who gets or who would get the returns?

They are pretty clearly not a publicly traded company. So do they have private shareholders? Are the an SCorp, an LLC, a partnership?

There was nothing they could have done differently. They don't have magical powers.

They are a goverent entity. Any returns they have goes to our government.

No i am calling this loser a horse's mouth and ass because that is what he has become for all of you and your children. You have a royal mfer in chief that corrupts your youth to no end teaching them that all adults are hypocrites, win any way you can in life, whatever it takes and if the president can be a mfer so can us kids and mom and dad so yeah lets have a run at the collapse of anything that holds society together in the name of bullying.

Revolution is coming and markets will get destroyed to unreal crashes unless this ahole is taken out literally whatever that means at this point. This is exactly how revolutions are born.

He is also destroying the economy (like most republicans have done after taking office 1-2 years later) with random ideas without proper planning exactly like he has done with all his companies. He is a charlatan mafia ahole that has made money by creating companies that take a dive so that his other companies that do "business" with them and those working in them (getting salaries) can make a killing in lucrative terrible for the sacrificial company deals, until the company is finally dead and gone but the other outside companies are prospering not because of actual growth but by victimizing whoever takes the fall and the shareholders and by relentless self promotion in the media. He is the ultimate snake oilman now running the country to the ground.

He has been a persistent lying ego maniacal loser all his life and those of you supporting him are making a deal with the devil and one day will recognize you were not American patriots but in fact traitors of anything great American ever celebrated as a reason to be in this country and be proud of her as a world example of exceptionalism.