US equities came into Friday trying to snap a four-week losing streak, the longest since Donald Trump shattered the Buenos Aires trade truce in May.
Despite the looming imposition of new tariffs on Chinese goods from September 1, the mood is upbeat thanks to conciliatory rhetoric out of both Beijing and Trump himself.
Thursday’s rally marked the third session in four that the S&P logged solid gains (see bottom pane in the chart) and Friday looked equally promising. There’s just one potential problem: The dollar is sitting at a near two-year peak, which raises the specter of imported disinflation and, more generally, tighter financial conditions.
Predictably, Trump lashed out at the strong greenback on Friday morning, blaming the Fed in the process.
“The Euro is dropping against the Dollar ‘like crazy’, giving them a big export and manufacturing advantage and the Fed does NOTHING!”, an incredulous Trump shrieked, before seething about a greenback that’s “the strongest in history”.
Does that sound good to you? Seriously. That’s a question. Trump wants to know.
“Sounds good, doesn’t it?”, the president asked, on the way to reminding America that it doesn’t sound good at all to “those manufacturers that make product for sale outside the US”.
This is a reiteration of Trump’s Tuesday tweets, in which he accused the Fed of being happy to watch American manufacturers struggle.
Of course, another thing that doesn’t “sound good” to US manufacturers is retaliatory tariffs and/or duties on inputs which serve to crimp margins and drive up costs.
Trump went on to assert that all we need for a mammoth equity rally is another Fed cut. “If the Fed would cut, we would have one of the biggest Stock Market increases in a long time”, he said.
Then, he claimed that companies who cite the tariffs as the proximate cause of their operating woes are lying. “Badly run and weak companies are smartly blaming these small Tariffs instead of themselves for bad management”, the president said.
“And who can really blame them for doing that?”, he went on to wonder.
Well, Trump, apparently. Trump can blame them, as evidenced by Friday morning’s tweets. “Excuses!”, the president shouted.
Finally, for the coup de covfefe, Trump (loudly) insisted that “We don’t have a Tariff problem (we are reigning in bad and/or unfair players), we have a Fed problem. They don’t have a clue!”
And speaking of people who don’t have a clue, he spelled “reining” wrong.