Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Are Central Bankers Taking Sides the in US 2020 Presidential Election?

Politics / Central Banks Sep 04, 2019 - 04:45 PM GMT

By: MoneyMetals

Politics

Individual investors are nervous about the stock market and the possibility of recession.

Meanwhile, institutional money from banks and hedge funds is keeping a bid under equities, pushing stock prices higher after every minor dip. Together with the “Plunge Protection Team,” they are keeping the wheels from coming off the stock market cart.

The question is whether that will continue. Or, to be more precise, will we see the monetary stimulus typically expected from the Fed during an economic slowdown, or will central bankers try to torpedo Trump’s re-election campaign as a Fed insider has just proposed?

President Donald Trump is increasingly critical of the Federal Reserve and chairman Jerome Powell for refusing to cut interest rates rapidly enough. He wants to place the blame for any recession and falling stock prices on the central bank and not on the trade war with China.



It remains unclear to what extent the Fed will capitulate to pressure from the President and heed recession warnings from the bond market, where yields remain inverted.

The U.S. economy will be a major issue in the 2020 election, and perhaps the deciding factor.

That is why the President has done an about face on monetary policy. Prior to the 2016 election, Trump lambasted the Fed for intentionally trying to boost Barack Obama and Hillary Clinton and for blowing bubbles in the markets.

Trump installed Jerome Powell as Fed Chair in February 2018. The FOMC continued the cycle of rate hikes that had begun under Janet Yellen. In less than a year, rates increased 4 more times.

The President began criticizing Powell when the stock markets cratered late last year. As the incumbent worried about re-election in 2020, he continues to bash his Fed Chairman and the FOMC for failing to provide stimulus.

Trump wants the Fed to drop rates dramatically and resume Quantitative Easing. Winning reelection isn’t the only concern. The President also wants to win the trade war he is waging against China, something else that will be more difficult if the nation slides into recession.

There are signs the Fed does not intend to play ball with Trump.

Former Fed official William Dudley published an op-ed with Bloomberg last week. He encouraged his peers not to “play along” with the President by providing stimulus to offset the negative effects of the trade war – which he calls a “manufactured ­disaster-in-the-making.”

Dudley suggests that Trump’s reelection “presents a threat to the U.S. and global economy.”

He did not offer his opinion as to which of the many socialists running against Trump would be less of a threat – or acknowledge that the contenders share Trump’s anger over Chinese trade abuses.

With arrogance typical of central bankers, Dudley thinks Fed policy is beyond reproach from the President.

He wants citizens to keep believing the Fed is run by infallible sages, independent of the fray in Washington DC. Except for the upcoming election where, for the good of all, officials should take sides against Trump.

If current FOMC members agree with Dudley and work to undermine Trump’s campaign, it will be another confirmation this President is up against an adversarial Deep State.

Unless the FOMC plans to surprise markets with their next move, something officials have carefully avoided in recent years, the most likely action at their next meeting is a quarter point cut.

But that small cut may be insufficient to reverse the inverted yield curve, halt recession talk, and quell speculation that the Fed is gunning for President Trump.

By Clint Siegner

MoneyMetals.com

Clint Siegner is a Director at Money Metals Exchange, perhaps the nation's fastest-growing dealer of low-premium precious metals coins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon, puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

© 2019 Clint Siegner - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in