On Monday, Donald Trump made a grandiose claim on Twitter.
In and of itself, that’s not “news”. He makes grandiose claims all the time. But this one was particularly silly and because it accompanied a new nickname for the Fed (“stubborn child”) it grabbed headlines.
Specifically, Trump claimed that, despite the Fed’s efforts to stop him, he had succeeded in engineering – and this is a direct quote – “one of the best Months of June in US history”.
That’s pretty bold, even for Trump. After all, America has seen a lot of “months of June” over the last two centuries, so claiming this is among the best, and then suggesting that you’re responsible for it, is rather presumptuous.
Fast forward to Tuesday and, perhaps realizing he needed to clarify what he meant by “best” (considering the US almost went to war with Iran five days ago), Trump explained that he was referring to the stock market. He then proceeded to thank himself, on behalf of you:
Stock Market is heading for one of the best months (June) in the history of our Country. Thank you Mr. President!
A couple of hours later, the The Conference Board delivered some bad news that seemed to contradict the president’s assessment of just how great this “month of June” really is.
Long story short, it looks like the trade conflict and the possibility of a shooting war with the IRGC are weighing on the American consumer. Consumer confidence printed just 121.5 in June, missing consensus (131.3) by a country mile. “After three consecutive months of improvement, Consumer Confidence declined in June to its lowest level since September 2017”, Lynn Franco, Senior Director of Economic Indicators at The Conference Board said. The 9.8 point MoM drop is among the largest declines since the crisis.
The present situation index fell to 162.6 versus 170.7 last month, while the expectations gauge dropped to 94.1 from 105.0.
“The decrease in the Present Situation Index was driven by a less favorable assessment of business and labor market conditions [and] consumers’ expectations regarding the short-term outlook also retreated”, Franco went on to say, adding that “the escalation in trade and tariff tensions earlier this month has shaken consumers’ confidence [and while] the Index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.”
Forgive me, but it would appear that the US consumer doesn’t concur with the president when it comes to just how wonderful this particular “month of June” has been.
“Surprise! Everything stinks”, Bloomberg’s Luke Kawa wrote on Twitter. “Every subindex of the Bloomberg economic surprise index is in negative territory right now.”
(Bloomberg)
But hey, look at the bright side: This is more fodder for Fed cuts.
Fed cuts will only embolden people to go long at exactly the wrong time. This “expansion” is already stretched to the max. It can’t go on much longer without shaking out unproductive assets and shuffling the remaining pieces. This is the nature of the economic cycle. Without significant population growth or massive increases in productivity through new technologies, all we can do is become more efficient with our productive assets. Destroying trade relations, closing your borders, and threatening to sanction non-hostile foreign entities is exactly the wrong thing to do, especially at this stage, and 50bps ain’t gonna change that. Then to top it off, these clowns are gonna try to weaponize the USD by targeting Chinese banks.
Think about things from China’s perspective. You have decades of mutually beneficial growth to the point China is developed country. Had the US gone to China to discuss grievances in good faith, especially with our allies, we would have likely walked away with everything we wanted and a stronger alliance. China is not stupid, they know their IP theft and other BS practices couldn’t possibly last. But the way team Trump approached things was utterly fucking stupid. They only pissed off the Chinese government, polarized the entire population of China, and vaporized any semblance of trust and cooperation. Nothing short of a Xi bending the knee then bending over to get fucked would have sufficed. So now they are making long term plans to isolate the US and reduce global reliance on USD. China is thinking in decades while the US thinks until the next reelection campaign.
I literally have no idea how an actual foreign agent in the Oval Office would be more effective. MAGA = Make America Go Away