Bigger is Better: Trump Says a "Small Cut" Won't Do

-edited

Trump is openly campaigning for more than a quarter-point cut but the market has discarded that outcome.

Trump's views are widely understood, but he is on the campaign trail anyway: Trump Says He Wants More Than ‘Small’ Fed Rate Cut.

Single Cut Odds

The market thinks there is only a 27.1% chance of a 50 basis point cut.

That is up from 18.8% yesterday so it's likely Trump shifted the odds, but not enough.

Mike "Mish" Shedlock

Comments (34)
No. 1-14
Tater-Man
Tater-Man

30 years of central bank planning in Japan accomplished absolutely nothing -- except for a lot of debt.

The Fed is doing the same thing, and will get the same results.

Period. Amen. No buts. Same input, same output.

Tengen
Tengen

Some of us still remember the "big fat, ugly bubble" that a certain candidate talked about last election. My, how times changed after 2016.

Fortunately he did manage to lock her up, end the wars, build the wall, and drain the swamp, so at least he's not a total blowhard.

Tater-Man
Tater-Man

@Tengen Too much corruption in Washington DC for any president to really fix things. Comey and Brennan should not have been able to use government resources to attempt a coup, and corrupt members of Congress (who knew from the beginning there was nothing there, because Obama told them in deed if not in word) used a fraudulent coup to drag their own country through the mud.

Trump getting elected is a symptom of the underlying disease that is effecting the all G7 countries. Its why we are seeing similar persons winning elections all over the G7.

If you want to get rid of Trump, you have to fix the underlying problem: Washington DC is corrupt to its very core. Hilary is corrupt to her very core. That's why DC loved her and the rest of the country did not.

Bam_Man
Bam_Man

He wants the Fed to go all the way to "Minus 11".

Bam_Man
Bam_Man

CONfidence in the government, Fed and other equally corrupt institutions is steadily evaporating. Eventually, this will lead to loss of $USD reserve currency status and a shocking decline in US living standards. For now, the $USD remains the "purest gal in the whorehouse", but for how much longer - it's anyone's guess.

Blurtman
Blurtman

Moar cowbell!

Matt3
Matt3

We are in a crazy world. When the Greek 10 year is under 2%, maybe the US rates are too high. US rates look high in relation to other countries. Most of EU has negative rates. I would have said this was impossible and will lead to disaster. I would guess everyone here thought that QE would create inflation, gold would sky rocket and we would enter a depression. It hasn't - so far. Now I believe we are headed to MMT either with Trump or with any of the Democrats.

thimk
thimk

trump : the most indebted president in history ;; infer from here:

AWC
AWC

When the Fed inevitably announces it's intention to purchase equities directly, it will be widely understood that the Fed has become the Greater Fool of last resort. That's when PM's will shine.

That said, if Powell doesn't follow the White House script, he might be the man responsible for finally bringing the Fed down.

Casual_Observer
Casual_Observer

More winning. Proving lobbying Trump doesnt matter when it comes to Qatar, Dubai or UAE - all who have Kushner in their back pocket .

Tater-Man
Tater-Man

I wish Trump and the cabal of criminals in Washington (Congress, lobbyists, and the academics in the Eccles building) would factor in the loss of interest income people get hit for while we subsidize a city full of parasites (DC) and their bank CEO friends.

A rate cut (if it happens) will hurt people who need interest income. It will not fix the economy anymore than it fixed Japan.

A rate cut is a lot of loss, with absolutely no gain.

Advancingtime
Advancingtime

As we have come to know more about President Trump it is clear he is very comfortable with economic manipulation. This is not written as an attack on Trump but to point out the President has a distinct view of the world which spills into the financial system. Trump appears to embrace MMT and often seems more worried about today than the future. His "damn tomorrow" attitude is reflected in deficit spending and calling for lower interest rates.

Trump's delusion that his stock market can go straight up forever is not based on years of stock trading but rather his years in real estate where inflation treated him well as prices rose ever higher. The article below argues this has skewed his views on the economy in ways that might damage us in the future.

Tater-Man
Tater-Man

@Advancingtime - When Trump Organization went bankrupt, a lot of people blamed Trump for buying the Trump Shuttle (now Delta Shuttle I think?). Others said he had too many properties levered in debt. The stock market had been on a tear, but Trump doesn't buy stocks (according to Trump, I have no idea).

But when creditors dug into Trump Organization, they realized the bankruptcy was caused by a helicopter crash that killed several senior executives who ran day to day operations while Trump "made deals". Art of the Deal and all that. Trump tweets and draws the crowds, he knows how to deal with crooked city officials who demand bribes and union bosses who demand kickbacks when building supplies are brought to a job site.

Trump relied (and probably still relies) on a group of trusted advisors to handle lots of the details, to actually execute Trump Organization strategy.

Plenty of corporations and armies have been stymied because the leader had vision but didn't have lieutenants who could execute.

President Trump (as opposed to CEO Trump) has had a lot of trouble finding lieutenants who can execute his ideas, people who can get things done. There has been a LOT of personnel turnover.

Obama had the same problem. Bush II had Colin Powell and Condolesa Rice and Rumsfeld to execute, but Bush II had no vision. Bill Clinton mostly had vision for coed interns, but he also lacked lieutenants who could get things done.

Presidents and CEOs need solid people who can execute the leader's vision. HR departments spend a lot of time making sure they can attract good employees; companies that don't have trouble.

Washington DC has so much corruption, and confirmation hearings are such partisan witch hunts, that Presidents of both parties are unable to get good lieutenants to get things done

abend237-04
abend237-04

Every national politician has two options when it comes to economic policy: Educate the electorate on the dangers of government prolificacy and the need for sound fiscal policy OR badger the Central Bank for lower interest rates and a resulting weaker currency. Fed Chairman Powell is on record as opposing QE3 under Bernanke, "It'll never be enough for Wall Street; even $4.3 trillion won't be enough..." but he can't stand alone against a currency race to the bottom, which is what's underway.

I believe the root cause of Europe's economic malaise lies in ECB efforts aimed at protecting the German export engine via low interest rates and a weaker Euro.

13 Trillion dollars of societal capital parked idle in sovereign junk is a damning indictment of every Central Banker and national politician on the planet.