Who Will Win in the War of Policy... President Trump or Jerome Powell?

The Trump White House is currently on a collision course with the US Federal Reserve (the Fed).

First a little background.

The Trump administration has “branded” the stock market as part of its success story. President Trump himself has tweeted on the subject more than 20 times. And Secretary of the Treasury Steve Mnuchin has even stated publicly that the Trump White House views the stock market as a “report card.”

Put simply, the White House wants stocks to be as high as possible.

On the other hand, the Fed has made it clear that it will be focusing on the real economy as opposed to the financial markets. New Fed Chair Jerome Powell has emphasized this approach in multiple speeches and Q&A sessions. He has even explicitly stated that some sectors of the stock market are “overvalued” (an extraordinary statement for a Fed Chair).

With that in mind, the Fed is embarking on an AGGRESSIVE tightening schedule, having already raised interest rates SEVEN times, with an additional five hikes planned in the next 18 months.

At the same time, the Fed is pursuing Quantitative Tightening (QT) in a hope to shrink its mammoth $4.4 trillion balance sheet. QT started at a pace of $10 billion per month. It increases to $30 billion per month in April. And it’s increasing to $50 billion per month this month (July)

ALL of this is VERY stock market negative.

In the short-term, President Trump’s tweets and verbal interventions from cabinet officials can induce a rally in stocks… but it is the Fed that will determine where the markets are heading. It is not coincidence that stocks peaked before QT hit $30 billion per month and have since struggled to reclaim their former highs (despite MULTIPLE efforts by Trump admin officials to “talk up the markets”).


What does this all mean?

The Trump White House and the Fed are on a collision course. And truth be told, unless the Fed reverses course, stocks will drop, and drop HARD.

How hard?

The current downside target is in the 2,300-2,4500 range on the S&P 500.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It's called The Stock Market Crash Survival Guide... and it is available exclusively to our clients.

To pick up one of the 100 copies...use the link below.


Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research


brianshell curmudgery Mon, 07/09/2018 - 20:02 Permalink

Gold keepers have a dilemma. If a gold coin is minted as one dollar and the gold value is ten dollars, how is it used in trade?

The point is congress' right and duty to "coin" money and regulate its value, if calculated in gold, requires the congress to own all the gold on earth. That's not possible so they cannot regulate its value to the same standard that the market would.

Thus, fiat currency that is not based on gold or silver or any other commodity that cannot be controlled completely by the sovereign, can indeed be regulated to keep the supply in line with the demand.

Of course, that rules out debt based currency such as federal reserve notes which can never be repaid and precludes the ability of the sovereign, the US treasury and congress, from regulating the money supply and eliminating inflation or deflation.

In reply to by curmudgery

gdpetti 666D Chess Mon, 07/09/2018 - 13:42 Permalink

He takes orders like all the rest.... the question is whether or not he is SG level? if not, then just a puppet/tool.

This farce continues because none seek to end it... China wants to take the helm without getting their hands very dirty... Russia has been in the penalty box since Putin took back the reins of his country from our guys over there... and Russian history is full of stopping the western expansion... remember Napoleon? or the Germans and those before and after... unlike most larger nations, they aren't running up endless debt... in fact, they are doing the opposite... so they are the biggest obstacle in our OWO farce.... which the SG is 'outing', exposing, taking down... .'out with the OWO , in with the NWO'... and the markets are just part of that takedown... but today and so many others seem to say that our doped up party will never end...

But the SG has plans to do just that..... and they know Mother Nature is approaching anyway to do the same on a much,  much larger scale... been about 13k yrs since we had this big of a show approaching. All shows come to an end... if Trumpy was smart, he'd start returning to his campaign talk about how overpriced the market is... or at least prepare his own portfolio... same with the rest of us... waiting for the inevitable is boring though, isn't it?

In reply to by 666D Chess

MrNoItAll Mon, 07/09/2018 - 15:33 Permalink

Trump is a willing participant in setting himself up as the fall guy for the coming global economic meltdown. He is doing it not just for the country, but for the world. When things get really nasty, which they will soon be doing, everybody is going to be looking for someone to blame. Trump is IT! It is a role that he appears to relish. Having someone/something else to blame (Trump/Trade Wars) takes a lot of the pressure off of Xi, Putin and other world leaders. They can say "Hey, not my fault, Trump did it!". A common enemy is what binds peoples and nations together in dire situations, and dire situations is what we have coming down the pipeline.

voting machine Tue, 07/10/2018 - 06:56 Permalink

Trump has to hope the markets stay up

Nothing has changed in the economy since 2008

It's all bad and it's gotten worse

90,000,000 + are still not counted by the BLS

Weren't we all saying how phony the GDP & BLS numbers were during Obama ?

What's changed ?