With an unprecedented corporate tax cut failing to stimulate the economy, a recession looming, and an all-important election on the horizon, our increasingly desperate president has apparently decided once again to throw caution to the wind, and go with his gut. Whereas other presidents, if faced with similar circumstances, might try to increase infrastructure spending, or cut taxes on middle class American workers in order to spur the economy, the “chosen one” has taken a significantly different tact. Trusting his instincts over the insight of experts, Donald Trump has decided that belligerence is his best course of action, attacking his own Federal Reserve in hopes of bullying them into lowering interest rates even further, and attempting to bully the Chinese into making trade concessions. [He did also promise to cut middle class taxes, but only if we reelect him. As you’ll recall, though, he promised the same exact thing before the 2018 election, and never followed through.] Here’s a quick rundown of what happened on Friday… If, like me, you’ve wondered how it’s possible that a man born into tremendous wealth could have filed for bankruptcy six times, I think, when you read through this, it might all start to make sense.
Our story begins Friday in Jackson Hole, Wyoming, where Federal Reserve Bank Chairman Jay Powell made a simple statement of fact, saying that, “trade policy uncertainty seems to be playing a role in the global slowdown.” This, as you might imagine, pissed off the man responsible for said uncertainty… Donald Trump, upon hearing what Powell had said, tweeted, “Who is our bigger enemy, Jay [Powell] or Chairman Xi?” [For those of you who are new to politics, this isn’t normal. Presidents don’t usually attack their own political appointees as being “enemies” of America.] Then, our President turned his attention to China. Doubling down on his threat to increase tariffs on Chinese imports, Donald Trump “ordered” U.S. corporations to immediately move their business elsewhere. [He, of corse, has no authority to make such a demand.]
Some, of course, questioned whether this was a smart play on the President’s part, but Donald Trump, always supremely confident in his own negotiating skills, in spite of all the evidence to the contrary, said he was confident that his bullying would work. “They want to make a deal,” he said. [He also said that China would pay for the tariffs that he was levying, which isn’t true, as the cost is being passed on to U.S. buyers. But, again, this isn’t anything new, as he also promised that Mexico would pay for his ineffective and racist wall, and we know how that went.]
The Chinese did not, however, want to make a deal. Shortly after Donald Trump issued the above tweets, China’s Commerce Ministry issued a statement saying, “China strongly urges the US not to misjudge the situation or underestimate the determination of the Chinese people, and to immediately stop its wrongdoing… Otherwise the U.S. will have to bear all the consequences it has caused.”
And, Trump, apparently still not understanding the significance of what was happening, responded by saying that he’d raise tariffs even higher on Chinese imports.
OK, so remember how Jay Powell had said in Jackson Hole that markets don’t respond well to “trade policy uncertainty”? Well, he was right. And, after this back-and-forth between Trump and China, the Dow fell 745 points… Oh, and here’s the most important thing. Before Trump started tweeting about Powell and China, the Dow was actually up by 200 points.
By the end of trading on Friday, the Down finished 630 points down, with the Nasdaq having fallen by 3%, and the S&P 500 by 2.5%. And every bit of this can be traced back to the antics of Donald Trump… It’s true that the markets have bad days under every president, but, in this instance, we know for a certainty that Donald Trump single-handedly swung the market by 800 points. Again, this is absolutely unprecedented.
Here, if you’re interested, are the graphs.
I hope none of you were planning to retire any time soon, because, if you’re savings were in the market, you likely lost a bundle. And it was all thanks to our increasingly unstable president.
10 Comments
Aloha, Don’t for a moment believe that Trump is being stupid. He is following a specific foreign policy objective, ie. decouple the US economy from China. When we go to war with China (shooting war not trade war) our economy cannot be dependent on China. US economic hegemony is being broken. Everything about US foreign policy is about coercing recalcitrant countries into doing business with us on our terms. We have lost our 20 year war in Afghanistan, and we are failing else where. Russia has successfully pulled itself out from under US dominance. Iran, Venezuela and N. Korea persist. Syria, Iran and Russia has just about defeated the last US supported jihadist in Syria. Trumps repeated “overtures” to Putin are futile attempts to separate Russia and China. Putin know the US cannot be trusted and has joined with China ie. Russia has made the decision to join Asia since Europe will not have them. Trump shit canning the INF treaty (we may already have nuclear cruise missiles in Poland and Romania) is part and parcel of the coercion campaign. But we are so drowned in American Exceptionalism propaganda that we do not even care about our growing threats against two nuclear armed nations. I am sure the Leader will issue some other insane tweets when he gets home to further distract us.
https://www.moonofalabama.org/
Aloha, by the way, I suspect Trumps twitters on Friday helped some of his buddies make a bundle. Allowing them to buy cheap,after all you can count on the Feds “Plunge Protection Team” to ensure that the market will rebound enough on Monday so that they can sell on the upswing.
Do not underestimate the power of greed
Very stable genius.
Aloha, markets up 230+ points so far this morning (PPT at work?). Trump’s buddies are now able to unload some of those bargains they got on Friday. I would expect more market manipulation by Trump over the next several weeks. Volatility is essential for grifters and speculators to make money. Trump is doing precisely what his plutocratic buddies want from a President, keep creating uncertainty so that it is possible to flease the unsuspecting and the gullible. Just like Trump needed Mueller (no other way to keep people fixated on Russiagate) who was appointed by Trump loyalist, Trump needs Powell, his appointee to the Fed. I’m sure con-men have a name for this kind of game. Just like comic duos need a straight man, Trump needs a foil to play off of.
but as we all know I am a dolt, and so I am sure I am not understanding the reality around me and what we are witnessing is a normal correction and not a manipulation.
It’s occurred to me in the past that those with leverage over Trump put him up to these things so that they can short the market, or just because they want to harm the country. My sense is that this all started because he was pissed off about Powell, though.
Aloha M, I think Trump is pissed off at Powell the way Abbot would be pissed off at Costello. You can’t run a scam if you can’t create conditions for the scam to work. It seems like no one on MM ever watched “The Sting”.
Dolt,
Just put all your retirement crumbs in a REIT with a focus on Greenland and you should make out great. I’ve been investing in Northern Ontario real estate (and ammo of course) and now I’m worried that I wasn’t forward thinking enough.
But volatility is trending up which has been another predictor of actual market corrections (-10%) in the new superheated algorithm based markets.
https://www.dailyfx.com/forex/market_alert/2019/08/23/sp-500-index-price-sinks-as-vix-soars-on-china-tariffs-trump-tweet-fed-powell.html
Anything in the news about Tulsi getting traction with the Alt-right as a disruptor???
Aloha JB, thanks for the investment advice. If I had any money I might follow it, a SS check does not really provide much for outside investment opportunities.
Don’t know about Tulsi getting traction with Alt-right. Do know that this story has lots of leggs among corporate dems who shamelessly spread a nearly fact free Russiagate narrative though. Hey don’t forget that she is an Assad apologist and a secret cult hindu nationalist tyrant loving surfer girl.
90% of human behavior attributed to intention much less collusion is 100% attributable to reactivity, fear and greed. There’s no plan to hurt others— it’s all subconscious and most of it is passive— Just chaos, fear, greed and human failing.