Trump on the Fed: They’re disruptive

A few things stand out –

Trump complains that the people voting on the Fed’s board are “not my people” – I’m not sure the Fed is supposed to be subordinate to the President. I swear he literally thinks he was elected King.

Also, Trump seems to think the Fed sets the interest rate on Treasury bond issuance, which is weird because it’s called an auction, people bid competitively in auctions, it’s right there in the name of the thing!

Finally, the Fed being “disruptive” – I actually agree with Trump on this. Powell’s off the cuff remarks last fall (“we’re nowhere near neutral”) were roiling markets even before the ill-fated December hike. The Fed should stop talking or learn to speak the Greenspanian rorschach-test dialect of English, where everyone takes away whatever they’d like and no one can claim they have a f***ing clue about what he actually meant.

The thing is, though – Trump put Powell in the seat. Powell was a known hawk. If he wanted a dove, Janet Yellen was his best bet. But she didn’t look the part. This guy’s always looking for someone “right out of central casting,” which is why he’s perpetually surrounded by incompetence and drama or the kind of competence that works against his agenda.

Additionally, absent the tariff thing, my guess is we’d be at Dow 30,000 by now. Nothing has been more disruptive and counterproductive to the animal spirits produced by the tax cuts. The President kicked off the trade war by pointing to the 2017 stock market rally in 2018 and saying “we’re playing with the house’s money now.” Sounds like an aphorism he picked up somewhere along the line during his Atlantic City misadventures.

But Trump and his economy ARE the house. Not the gambler. The house doesn’t talk about playing with the house’s money.

Anyway, watch/listen to this morning’s exchange between the President and CNBC’s Squawk Box:

Here’s President Trump calling in to CNBC and describing the Federal Reserve as “very, very destructive” while making a case for a rate cut.

“We have people — it’s more than just Jay Powell — we have people on the Fed that really weren’t, ah, they’re not my people.” pic.twitter.com/Ei2vrrCTyo

— Aaron Rupar (@atrupar) June 10, 2019