President Trump Says Stocks Should Be 10,000 Points Higher, Blames Fed
Even though consensus suggests that Federal Reserve is unlikely to raise interest rates this year, that doesn’t mean that President Trump’s battle with the agency is cooling any. In fact the war of words has escalated into political action as the President looks to install supporters of his own on the Board of Governors. On top of that, this weekend Trump suggested that the U.S. stock market could be significantly higher had the Federal Reserve “done its job properly.”
In a tweet sent on Sunday, President Trump said, “If the Fed had done its job properly, which it has not, the Stock Market would have been up 5,000 to 10,000 additional points, and GDP would have been well over 4% instead of 3%…with almost no inflation.” He concluded, “Quantitative tightening was a killer, should have done the exact opposite!” For the record, U.S. gross domestic product grew just under Trump’s 3% goal for 2018, coming in at 2.9% — although the year did include impressive quarters with, with Q2 recording a 4.2% expansion and Q3 marking a 3.4% growth before slowing to only 2.6% in Q4.
The President’s tweet is the just the latest statement he’s made to this effect, taking aim at the Fed and his appointee Jerome Powell. Breaking precedent, Trump has repeatedly criticized the agency as they’ve raised interest rates over the past several months. Among his past barbs, the Commander in Chief has said the Fed was “going loco” and urged them to “Take the Victory!”
As mentioned, moving beyond harsh tweets and statements, Trump is now looking to influence future Fed decisions by floating at least one unlikely candidate to join the Board of Governors: former presidential candidate and Godfather’s Pizza CEO Herman Cain. Although Cain found some success in his 2012 presidential primary run where he pushed his “9-9-9” tax plan, he later resigned amid accusations of sexual misconduct. Now, upon word that Trump intended to nominate Cain, Senators on both sides of the aisle have openly criticized the choice and several Republicans have stated they wouldn’t vote to confirm Cain were he to be formally nominated. As a result ABC News reports that Cain is expected to withdraw his name from consideration.
It seems that the first few months of President Trump’s vocal critique of the Federal Reserve was just the beginning. Despite the dovish stance coming from the agency these days, the President is making it clear that he willing to do what it takes to impose more of his wishes on the Fed’s policy. While tweeting his disapproval is one thing, it remains to be seen if the Senate will allow Trump’s Board of Governor’s picks to clear. From what we’ve seen so far, prepare for an even bigger political war to be waged if they don’t.