“It Was Only A Matter of Time”: Trump Sets His Sights on the Fed’s Tightening and the Strong Dollar
Who says that the President doesn’t – and shouldn’t – pay attention to the U.S. Dollar’s value?
Well – President Trump sure does. . .
Just look at his tweets from this morning. . .
This came just a few hours after Trump criticized the Federal Reserve’s tightening path.
Trump went on to say during an interview with CNBC that he’s “not thrilled” with the Fed’s tightening – potentially slowing the economy.
“I don’t like all of this work that we’re putting into the economy and then I see rates going up.” said Trump
His comments shocked many. There’s a tradition – or rather a taboo – that the White House stays away from monetary policy.
But we should know better – Trump will always do what Trump wants.
And it’s clear that what trump wants is a weaker dollar. . .
So far, the Fed’s hiked rates five times since Trump entered office. And from what I can see, the economic growth cycle has peaked and now is heading downwards.
I’ve written that over the last 15 months – the U.S. economy has grown a bit. But that was all from a weakening dollar.
From January 2017 to February 2018 – the USD fell more than 14%. This greatly boosted exports and helped growth – not to mention the massive amount of debt the Treasury piled on and is trickled down into the economy.
But since March, there’s been a massive short-covering rally for the dollar. And that fueled a reflexive short-term feedback loop into an even stronger dollar, all-while decimating Emerging Markets and commodities – basically anything that’s anti-dollar.
Now the rapidly strengthening dollar is becoming a hinderance – especially when Trump has engaged the U.S. into a trade war with the second largest economy in the world – China.
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