Donald Trump’s ready to “rock and roll” and he’d very much appreciate it if Jerome Powell plays along.
Three weeks on from telling the Davos who’s who that he’ll “demand” lower interest rates in the US (and, more germane probably, 24 hours after Powell told the Senate the Fed’s on hold, a message he was set to reiterate Wednesday in the House), Trump weighed in loudly on monetary policy. He was quite explicit about the link between rates, the dollar and his trade war.
“Interest Rates should be lowered,” Trump shrieked, on his social media platform, which is probably safer than Musk’s at this point. Lower rates, Trump went on, “would go hand in hand with upcoming Tariffs!!!” He added the following, for emphasis: “Lets Rock and Roll, America!!!”
The exhortation for the Fed to get back to cutting came on a day when the BLS delivered what it’s entirely fair to describe as one of, if not the, worst CPI reports in years.
The inflation update, which showed core price growth running very warm and so-called “supercore” prices outright hot, prompted a fairly sharp move in front-end rates and STIRs, where traders trimmed bets on 2025 Fed easing inside of 30bps. So, the market’s now faded the second cut almost entirely.
I suppose this goes without saying, but one lonely rate cut in 2025 isn’t going to satisfy “rocker” Trump who wants to — I don’t know — dress up with Powell in matching Chrome Hearts outfits and go on tour, maybe.
This nods at what I’ve variously described over the years as Trump’s “insanity loop.” I walked back through it late last week in anticipation of a hot CPI readout. If you need a refresher, you’re encouraged to read “Don’s Dollar Dilemma,” but here’s the gist of it, from that linked article:
Pretty much everything Trump says and does — with the exception of undermining the rule of law and leading armed coups — is conducive to dollar strength, and yet he needs a weaker dollar to fight the trade war. There’s a paradox embedded in that paradox: The inflationary impact of tariffs can be partially offset by a stronger dollar, but you can’t have it both ways. Either you want to “win” the trade war with a weaker dollar, or you want to cushion consumers from tariff-related price pressures with a stronger dollar. Trying to have both will drive you crazy or, in Trump’s case, more crazy.
Trump thinks he can square that circle by bullying Powell, and maybe he can, but not without risking rekindled inflation.
For any other president (including and especially Joe Biden), inflation’s a political death knell, but Trump’s more than a president — he’s a would-be messiah and, relatedly, a cult leader.
People will drink the Kool-Aid for a cult leader (literally), which presumably means they’ll have no qualms whatever about paying more for Kool-Aid packets. (You can’t take it with you after all, and if you’re in a cult, you’re on the way out shortly anyway.)
Besides, Trump will never concede that any inflation revival’s his fault. An hour after inviting Powell to rock with him, Trump delivered a three-word assessment of the CPI release: “BIDEN INFLATION UP!”
It seems that if Powell did accede to Donnie’s tantrums then it would hasten the time to when Donnie loses the golden ring of power. Maybe Powell acceding is not such a bad idea.
“You’re on the way out shortly anyway” – Literally laughed out loud for that one.
While the cult awaits their being Raptured, they can enjoy Trump’s musical stylings in Heaven’s antechamber, which range from a heretofore buried-for-posterity gay Conga line chant by the Village People to a similarly-interred pre-cirrhotic Kid Rock frat boy anthem.
I’d rather be smited. Is there ANY song that Trump even knows all the words to? I wouldn’t even bet on Happy Birthday.
I want to Rock and Roll all night and implement tariffs every day
This is some really crazy shyte. Feels like layoffs coming. Prices continuing up. Were I Trump, I’d be worried that the crowd that cheers me now might turn and come after me with pitchforks.
It happened to Mussolini.
Yes, indeed. A fair number of MAGA people used to be Democrats.
Thanks, Obama!
I expect Trump will get his wish for lower rates sooner than most expect. He’s running full speed toward stagflation and I’m not convinced Republicans will avoid a prolonged shutdown as long as Democrats hold the line. Republicans might surprise me like they did in supporting Johnson, but they are sitting at 218 reps until at least April 1.
Also, Stefanik hasn’t vacated her seat yet, but once she does, they don’t even have a majority. It looks like NY will stall in filling her seat, so once they get the two Florida seats back, they’ll still only be at 219 for the foreseeable future. That doesn’t leave a lot of wiggle room to get a bill passed.
He’ll get lower rates even if he has to tank the economy, which it sure looks like he’s trying (or at least willing) to do. “Restructuring” always costs much more than expected (all upfront), produces unforeseen ramifications (often negative), and rarely gets through its payback period before the next round begins. From my limited vantage point, sure seems like all of these orders/changes are producing not just confusion and resistance, but are also a half-assed friction scattered across the whole economy. The consultants, lobbyists, law firms and think tanks are all on-boil, while a lot of recently productive people are left sorting out what’s real and what’s locker room talk, while contemplating a new job or early retirement, the need for a personal security detail, and possibly a lawyer on retainer.