Donald Trump (who is still pushing Stephen Moore’s Fed bid despite Moore’s professed affinity for putting literal children to work in factories as a way of “getting more Americans into the labor force”), cranked up the pressure on Jerome Powell a day ahead of an FOMC decision which is expected to produce a “dovish hold”.
On Friday, following an advance read on Q1 GDP that showed the US economy expanding at a 3.2% annualized clip (well ahead of even the most optimistic projections), Larry Kudlow showed up on CNBC to wheeze in David Faber’s general direction.
If you watch the clip (below), you’ll be forgiven for thinking that Larry’s primary objective wasn’t to crow about the better-than-expected read on the US economy, but rather to explain why the data didn’t render the administration’s calls for rate cuts even more absurd than they already were.
As we wrote last week, Kudlow’s insistence on pushing for rate cuts when the economy is doing as well as it’s doing and when the labor market is arguably overheating, is indicative of the extent to which this administration is hell-bent on employing the kind of reckless policy mix that, were the US not the US, would be viewed with extreme consternation by markets and ratings agencies.
Of course Trump isn’t just calling for rate cuts. No, he had to one-up his own sycophants by calling for a resumption of QE on April 5 while ranting to reporters during one of his ad hoc, driveway shout-a-thons:
Not satisfied that the Fed has gotten the message (because he’ll never be satisfied in that regard), Trump hit Powell on Twitter less than 24 hours ahead of Wednesday’s policy statement and press conference. Amusingly, he cited the Chinese example as something the US should aspire to.
“China is adding great stimulus to its economy while at the same time keeping interest rates low [but] our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening”, Trump tweeted.
If you’re wondering whether Trump has any real conception of what “quantitative tightening” actually is, the answer is probably “no”, although it likely has occurred to him over the past six months that the Fed’s efforts to let the balance sheet run off represent something of a technical headwind to his debt-funded stimulus.
“We have the potential to go up like a rocket if we did some lowering of rates”, Trump continued, using the cadence of a first-grader.
Does Trump have a number in mind when it comes to what “some lowering” should entail? You bet he does. Specifically, Trump reckons that Stephen Moore isn’t being ambitious enough to call for an immediate 50bp cut. Trump thinks the Fed should cut rates by, quote, “like one point” and he also says “some quantitative easing” is surely in order.
And don’t you think for a second that he didn’t immediately turn around and tout the economy in the very same tweet, because he did.
“Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records”, Trump mused, before suggesting that somehow, this would all lead to the “National Debt start[ing] to look small!”
You really can’t make this stuff up. This is yet another instance where Trump has transcended satire – there is limited scope for anyone to add comedic value above and beyond how ridiculous the president’s own words are.
We’ll just leave you with a passage from our week ahead preview published, as usual, on Sunday night:
Obviously, the Fed is under all kinds of political pressure to cut rates and as much as I’d like to tell you that it would be a complete and total shocker if they did, I regret to say that we have reached a point in the United States where nothing would surprise me in terms of how the steady erosion of previously independent institutions ends up manifesting itself.