The ink on the Fed's latest rate cut - the first in a decade - still hasn't dried, and here comes the president demanding, drumroll... more.
As we expected earlier, when we noted the not one, not two, but three surprise rate cuts by Asian central banks, and said that it's only a matter of time for Trump to chime in, Donald Trump did just that when in a trio of tweets, the president once again lashed out at Powell for not only not cutting more than just 25 bps - because it is "too proud to admit their mistake of acting too fast and tightening too much (and that I was right!)" - but also because the rest of the world is now winning the race to the bottom: "They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW" Trump boomed, even though the Fed ended their "ridiculous quantitative tightening" LAST WEEK.
Trump also unveiled that he is now a yield curve expert, although what he means by "yield curve is at too wide a margin" is not exactly clear since the 3M-10Y curve just hit a new 12 year low of -40bps as the entire yield curve now screams recession.
“Three more Central Banks cut rates.” Our problem is not China - We are stronger than ever, money is pouring into the U.S. while China is losing companies by the thousands to other countries, and their currency is under siege - Our problem is a Federal Reserve that is too.....— Donald J. Trump (@realDonaldTrump) August 7, 2019
....proud to admit their mistake of acting too fast and tightening too much (and that I was right!). They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW. Yield curve is at too wide a margin, and no inflation! Incompetence is a.....— Donald J. Trump (@realDonaldTrump) August 7, 2019
....terrible thing to watch, especially when things could be taken care of sooo easily. We will WIN anyway, but it would be much easier if the Fed understood, which they don’t, that we are competing against other countries, all of whom want to do well at our expense!— Donald J. Trump (@realDonaldTrump) August 7, 2019
Trump's rant, of course begs the question: why is he desperately trying the Fed to panic into more rate cuts in what Trump has repeatedly dubbed the 'greatest economy ever.'
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So what happens next? As we said first thing this morning, "we are now in a race to the bottom, and the US is badly lagging so expect either more rate cuts, more QE or direct currency intervention as Trump gets impatient with the ongoing dollar strength."
How will this happen? Read "The "National Emergency Loophole": How Trump Will Intervene In The Market To Crush The Dollar" It lays out all you need to know what happens next, and why gold and cryptos are about to soar much, much higher.
And just in case Powell gets an angry phone call this morning, don't be surprised if we get an emergency rate cut from the Fed one of these days: and why note - the Fed's credibility is now almost entirely gone.