Does anybody really know what time it is
Does anybody really care
If so I can’t imagine why
We’ve all got time enough to cry
We got ahead of ourselves yesterday.
We were waiting for the big Fed announcement on a rate hike. But what happened? No trumpets. No bells. No heralds. None came.
Finally, we realised it was Tuesday, not Wednesday.
So, today’s the big day…not yesterday. All eyes with nothing better to do turn to the Fed. Lonely eyes. Sad eyes. Troubled eyes…
…and the hopeful eyes of Mr Donald J Trump.
The Fed faces a tough choice. It can continue to raise interest rates, as planned, in defiance of Mr Trump…or it can put its tightening program on pause.
The modus operandi of the Fed and the president are now well known. The Fed eases too much for too long. Then, it tightens, setting off a correction. And then, it panics and slashes rates again.
Mr Trump, meanwhile, starts a fight…causes a big ruckus with insults and wild charges…And then, he announces a victory, while quietly backing off.
The media loves it. One fight after another…the mud flies…the spectators gawk…
The fans think Trump is fighting for them. Critics think he is fighting against them. And life goes on.
But this fight — between the Fed and the president — is different. Most likely, the Fed will pause. But whichever way it goes, both sides lose.
Better off losing
In a tweet on Tuesday, President Trump made it clear which way he wanted the Fed to go:
‘I hope the people over at the Fed will read today’s Wall Street Journal editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 Bs. Feel the market, don’t just go by meaningless numbers. Good luck!’
You gotta love the prez. He is living proof of the American dream; that anyone who inherits $400 million can still grow up to be rich.
But where did he get the idea that the $30 trillion stock market was ‘illiquid’? Or that the Fed’s mistake was to raise interest rates…rather than leave them too low for too long?
As for the ‘meaningless numbers,’ those are the same numbers Mr Trump cites as proof of what a great job he is doing.
And ‘feel the market’? All investors are feeling is pain and puzzlement. They thought POTUS had their backs. And already, stocks are down nearly 20%. As Joe Withrow shows in today’s Market Insight below, roughly half of all US stocks are now in bear market territory.
Approximately $6 trillion has been trimmed from the wealth of the people in the rich zip codes. And if former fed chief, Alan Greenspan, is right, whether the Fed pauses or not, there will be plenty more losses still to come and plenty of blame to go around. From CNN:
‘Greenspan said it was unlikely that the current market would stabilize and then take another big leg higher. “It would be very surprising to see it sort of stabilize here, and then take off again,” Greenspan said. Markets could still go up, but “at the end of that run, run for cover.”
‘Greenspan told CNN the bull market is over, pointing to how stocks have fumbled in recent days. On Tuesday, stocks rallied but they tumbled on Monday and have been in a decline since October, weighed by concerns over global trade conflict and slowing global economies. The S&P was on track, as of Monday’s close, for the worst December since 1931.’
Plenty of blame
Much of the blame will fall upon the Fed. But some will splatter onto Mr Trump’s red tie, too. Had he known what time it was, he would have pushed the Fed to do more normalising last year…That would have brought on a correction when it could still be called Mr Obama’s crisis.
Then, the president could have gone on the attack…taking up fights that really mattered — cutting spending, reshaping the Fed, draining the Swamp, opening up the files of ‘classified’ claptrap to public ridicule, putting the Deep State in its place. (None of that was ever likely to happen…but it would have been fun to watch the Great Disrupter disrupt something worth disrupting.)
But we are passing the midpoint in Mr Trump’s reign. And the president now insists that this is His economy…that He is responsible for it…and that if anything happens to it, it will be over His dead body.
And maybe, we will never know for sure what’s going on…or what time it is.
But at least people are starting to look at their watches.