With his video address to Davos today, Trump proves he is economically clueless.
Speaking to an assembly of global leaders at the World Economic Forum in Davos by video, President Donald Trump says he’ll ‘demand that interest rates drop immediately’.
President Donald Trump lobbed his first volley at the Federal Reserve, saying Thursday that he will apply pressure to bring down interest rates.
“I’ll demand that interest rates drop immediately,” Trump said. “And likewise, they should be dropping all over the world. Interest rates should follow us all over.”
Trump at Davos
Please start this at the 6:15 mark. You will have to suffer through a 30 second ad, but it will be worth it.
For many minutes, Trump bragged to the world how great he is, in his video addess. Then he issued this demand.
“My message to every business in the world is very simple: Come make your product in America and we will give you among the lowest taxes of any nation on Earth.”
Then he demanded Saudi Arabia lower the forces of oil and ability to set interest rates for the whole world.
Trump is read he speech word for word and sounds wooden.
Trump said many things I totally agree with, but setting interest rates by his mandate is over the top ridiculous.
Trump Demand That He Replace the Fed
With his statements, Trump demands that the decision on where rates should be are set by him and him alone.
Powell won’t go along. Nor should he.
End the Fed
There should no be a Fed as I have stated many times. Interest rates should be set by the market. But Trump is not the market.
I have also said that the one thing worse than the Fed setting rates would be politicians setting rates.
Economically Illiterate
At Davos, Trump proved he is economically illiterate. When Trump gets rid of Powell, and he will, Trump will appoint an economic puppet that will do what Trump wants, rather try to.
The Chair has a lot of sway, but Trump would need to stack the Fed with a majority of puppets. Also, the Senate would have to approve the next Fed chair.
Wish Granted
Ta Da! Let’s assume Trump gets his wish. Inflation would immediately soar if interest rates were set too low.
But yields on the long end would then soar unless Trump proposed taking over the entire bond market.
Who knows? If Trump is crazy enough to make himself the entire Fed, he may as well take over the entire bond market too.
What a pompous, economically illiterate speech.
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In case you missed it, please see Lacy Hunt on the Global Capacity Glut and the “Mish Recession Indicator”
Global capacity is a very deflationary force. Trump policy and deficits are inflationary forces.
What Trump gets through Congress remains to be seen.
Trump has threatened to remove Powell but cannot legally do so until Powell’s term expires June 2026.
If Trump acted before then, he would be challenged in court, and lose immediately.
So, expect Trump to appoint a puppet in June 2026 – but the more controversial, the less likely the Senate will approve
Regarding Who Sets Rates
“In any event the Fed does not set rates anyway. As Gundlach says, they follow the 2 year. Not literally, but they have to conform even to what short market rates tell them to do.”
Gundlach is wrong
To understand why, see the Fed Uncertainty Principle
https://mishtalk.com/economics/fed-uncertainty-principle/
JP raided bank accounts (short selling), transferring wealth to the poor and the middle class. JP was Trump partner in 2020.
Short selling is mostly benign. And if the shorts are wrong, it provides rocket fuel for short squeezes.
We have an army of bootlickers frothing to take that position.
How did Powell work out as a puppet for Trump?
He didn’t. That is why he will have to be replaced.
That’s the point. There is no such thing as a puppet.
That’s right, my little puppet!
The doesn’t control long rates. Which is why the disaster of Yellen not terming out the debt correctly should really be a focus of yours.
The FED can control long rates by buying all the bonds with money created out of thin air. It’s called Quantitative Easing.
Incorrect. It’s called yield curve control. Last time it was done was 70 years ago. Show me where they will do it again.
Since we’re all fantasizing, Mike, perhaps a speech control neural implant from Elon could help? It needs programmed to limit his speech time to 20 minutes a day. Minimal riffing would lower the bloviating and misfires. Don would be forced to focus on the important stuff.
Blah, blah, blah,…..
Geez, give it a rest, mate.
If you can’t tell Trump the politico making a wishful speech from what he’ll actually do, then you need to revaluate and take a break.
And I can can say the exact same thing about you in regards to some of your articles as well:
You are economically and legally illiterate as well.
Actually I understood that the President has the right to fire him. It is only by convention that Presidents have avoided pulling that extremely destabilizing nuclear option. I happen to like Trump but he would be mistaken to fire Powell and appoint a puppet. The US with its current debt load needs the world to believe that the Fed believes in sound money and has a steady hand on the tiller or we might be looking at 8 percent 30 years. If I were Mr. Trump I would cut their funding to spur streamlining of the Feds bloated operations and at the same time audit the organization and insist that the distribution of employees at the Fed needs to be more balanced Democrat vs Republican and that the Fed will embark on a path to get that done by 2027.
The President cannot just nilly-willy remove the Fed chairman because he is unhappy with him.
This has come up before. In the 1960s LBJ was furious with William McChesney Martin and wanted to fire him. He was told by the Deputy AG that he could only be fired for cause and policy disagreement did not qualify.
The Federal Reserve is unconstitutional.
“…’the Fed…have to conform even to what short market rates tell them to do’…To understand why…”
Does anyone here really not understand that the Fed are a bunch of partisan crooks?
He is an actor – reading a script… he is doing what he is told by the Ministry of Truth.
The tell is that he is promising to reduce interest rates as well as inflation … an average 10 yr old could be made to understand that reducing interest rates will only fuel inflation …
We are in a Truman Show .. a matrix.
Schwab offers a 3 month CD at 4.4%.
The 10 Year Treasury competes with CD rates of up to 4.5% for 1 year and that is why the 10 Year Treasury rate is 4.6% and 30 Year mortgage rate is 7%.
The 30 Year mortgage should only be no more than 2.5% above the annual PCE or CPI rate.
Get 1 Year CD rates down to 3% for 1 year and there will be less competition to the 10 Year Treasury and 30 Year Mortgage markets, Mister Mish.
Name calling the Thump is a fools game. Friday the 30 year home loan dropped below 7%. Parroting Hillary, Michelle and Barrack doesn’t work.
Trump wants to relive the low-rate environment of his first term. It was coincidence at the end of 2018, Powell wanted to reduce 10-year Treasury rates. The Fed then could repurchase its balance sheet of maturing 10-year Treasury Bonds, at equivalent yield, from Bernanke’s bailout of the mortgage crisis in 2008.
Powell began monthly buys of Treasuries and MBS/corporate securities in 2019. At the end of that year the Fed increased purchases to $80B Treasuries and $40B MBS/corporate securities each month. Which pushed 10-year Treasury rates down to 3 percent. This equaled the low rates of Bernanke’s bailout. Although there was no economic calamity in 2019, and nothing like the liquidity crisis of 2008. It’s a mystery why Powell isn’t widely criticized for this action. Because the following year, an actual monetary crisis occurred – the pandemic. Powell was forced to take rates down into the historic basement. Because of monetary shenanigans, Powell left no latitude for disaster. The Spanish flu of 1918, was far more deadly, corporate rates never fell below 2.5 percent.
Charts show inflation rapidly increased in 2019. Though most commentators blame the pandemic for the start of inflation. Current 10-year rates trade about 4.5 percent. Not far above the 3 percent level that ignited inflation in 2019.
Disbanding FEMA and giving each state the responsibility of taking care of its own problems is the best idea I’ve heard in a long time.
It’s all part of Project 2025. As is eliminating federal flood insurance, health care subsidies, etc. The idea is to eliminate as much federal government assistance as possible and let people rely on themselves. Which is easier for Trump to attempt, since he doesn’t have to buy your votes again.
Some of these things will be difficult for him, because he often needs congress to go along with it.
The only real way to lower the Fed’s interest rates is to dump the Federal Reserve. Their interest rates are prophylactics anyway. The whole point is that the Fed is a PRIVATE INSTITUTION whose main function is to make money for its investors. The manipulation of interest rates is just one way. As Ron Paul has been saying for decades, without the Federal Reserve the economy will find its own balance. It doesn’t need a national bank to play dice with the economy.
Well he’s no more clueless than the Fed, and the Fed IS known for jawboning rates and markets. Still it’s damning with faint praise as the Fed (and Trump) CAN move things temporarily, sometimes. And actually, all due respect to Gundlach, the Fed follows the 3/6 month rates closer than the 2 year. Just look at a chart, it’s there to see. And right now, the chart says no change as the 3 month is 4.312%, the 6 month is at 4.285% and the Fed Funds rate is at 4.33%, just a few basis points above the two, at least today. As you noted, the Fed follows the Market.
If Trump cannot fire Powell, how did Carter manage to get rid of both Burns and Miller in 1977 and 1979?
His party had huge majorities in both houses of Congress at the time, but I do not believe that the applicable statute has changed since then.
“A high tariff can never be permanent. It will cause dissatisfaction, and will be changed. It excludes competition, and thereby invites the investment of capital in manufactures to such excess that when changed it brings distress, bankruptcy, and ruin upon all who have been misled by its faithless protection.” Millard Fillmore, 1850
Highlight of the day was at the WEF when Trump slapped down the CEO of BofA so hard, he couldn’t even intelligently respond. All BofA public relations could do afterwards to clean up the massacre was deny the “allegations”.
Face it, Trump kicked a** at the WEF.
More like made an a** of himself.
The Federal Reserve could quickly bring down interest rates by buying a third of the outstanding US Treasury Bonds (but not Bills or Notes). It is relatively easy for anyone with deep pockets to manipulate markets with a well timed pace of purchases and “lot sizes”.
Japan has been doing it for 30 years. Bitcoin has been doing it for 15 years. Trump could *easily* do it for the next four years. Ask Lacy Hunt if you don’t believe me.
I smell QE when Powell leaves in 2026.
Y.U.G.E. QE
2025 will be a record year for deficits! Especially if we can get rid of the debt ceiling.
During his first term, Trump was wanting negative interest rates. (He said the same as Europe.) Money for nothing has skewed many things, including real estate, which is now in a bubble. Tweaking interest rates based on whimsical thoughts always ends badly. There should be little interest rate intervention, and the market should control the rates.
I just made him demand insurance rates go down too. I know it will have absolutely no effect, but the rubes will love it, and will have long forgotten before anything would have to happen.
“I DECLARE bankruptcy” – Michael Scott
And speaking of Trump cluelessness. Cancelling all the Inf. R. Act spending programs is one (likely stupid) thing; but cancelling all the ones ties in with Critical Metals mining AND processing -SOMETHING IN MANYCASE CHINA HAS NEAR ALL OF – IS FLAT OUT STUPID. When you kill them it’ll kill all that VERY VETTED coming supply. And even worse, ALL THOSE COMPANIES QUEUED UP TO BRING THE SUPPLIES AND PROCESSING ONLINE WILL BE BURNED LOSING FINANCING AND ALREADY HEAVY PLANNING SPENDING.
BURN THEM LIKE THIS AN YOU’LL SEE ALL THAT SUPPLY WALK AWAY FOR GOD KNOWS BEFORE ALL THOSE SITUATIONS CAN BE NURSED BACK TO HAPPENING.
FLAT FRIGGING STUPID. TRUMP ONLY KILLS THEM TO BE SPITFUL. NOTHING ELSE. NO LOGIC.
Always the BS preface like “Hasn’t been seen”. LMAO. What a fool making everyone laugh at us.
This is the incredible BS that’ll be unending. He mentions ‘terrible deficits” and he’s going to do “the largest tax cuts ever”! Sure, know yourself out. Everything is a free lunch.
Get set, long bonds will HAVE NONE OF THIS BS. FROM S&D ISSUES, TO CREDIT ISSUES – HE’LL PUCH THEM INTO THE BOND MARKET’S FACE. AND THEY WILL B-A-R-F!!
jUST WAIT.
The only way I’m getting that trillion is if the government borrows it and gives it to me.
Trump is maniac.
He thinks he is very powerful and can turn gold whatever he touches.
Nobody can deny that US is very powerful but there are things what
he can do and things what he cannot do.
Now we’ll see head to head show down with real economy which doesn’t
recognise US is powerful.
Your last sentence is so true!
People have not watched inauguration. There was a reason all those Tech folk happened to get the invite.
Directly ties in with Trump focus on energy.
US is being set to move in a new direction.
Sanders of Arkansas and Beshear of Kentucky both making a pitch at Davos. going with 21st Century High Tech future.
Days of Welfare State as economic companion ended.
Boy, you drank the Kool-Aid! Enjoy it! (While I eat popcorn during the s*** show!)
World is changing whether you like it or not.
Have been posting consistently what policies have been announced and probable effects.
The effects on economy will be profound once implementation gets underway.
TDS will not prevent this from occurring.
Trump wants OPEC to lower oil prices. They could accomplish that by bringing back all their shut-in production of 5 mbpd; most of which is held by the Saudis. This would result in excess supply, and lower prices: but only for a while.
Lower prices would result in increased demand for oil worldwide. It would also result in reduced capex spending by oil companies, particularly in the US shale patch. US shale oil companies have $65 breakeven costs for new wells. If prices drop below that level, drilling would slow quite a bit as US oil companies profits would disappear. Drill baby drill, would be replaced by “we can’t afford to drill”. As always in commodities, the cure for low prices, is low prices. At low prices, supply begins to dry up.
Saudi has been working hard in OPEC to hold back production in order to keep prices in the $70-$90 range. They need $81 just to balance their budget, and much higher prices to afford all their trillion dollar mega projects. And they just promised Trump, $600 billion in investments as well. It is hard to imagine that after 2 years of trying to keep OPEC together and prices in the $70-$90 range, that they would abandon OPEC, and ruin their countries finances, just because Trump wants them to.
Meanwhile, Trump is also threatening to shut down Iranian (2 mbpd) and Russian (4.5 mbpd) oil exports. If he is successful in this, that would exceed all of OPEC’s spare capacity, and it would actually force prices higher.
In addition, he is threatening 25% tariffs on Canadian and Mexican oil imports to the US.
This is a great show to watch. So many contradictory statements from Trump make it difficult for companies, and countries, to make future investment plans. Uncertainty is an investment killer.
It supercharges grift though.
The price of oil is no longer driven by demand. Some years back I read an article about the Chicago Commodity Exchange price of oil. Traditionally 75-80% of oil futures were driven by demand/consumption and 20-25% by speculation. That has now inverted because the demand for oil has plummeted. Saudi and others are sitting on the oil because there hasn’t been real demand for 7-8 years. Even China has had reduced demand, which is why it has been stockpiling oil.
The price of oil is clearly driven by demand, although a weak oil cartel can have temporary impacts.
Long term there is huge incentive to cheat.
But also, no nation wants to deplete its reserves leaving it nothing in the future.
Except perhaps Trump with “Drill baby drill” insanity.
Those are the forces in play.
Man, I’m gone.
Your TDS is over the top calling everything you don’t agree with insanity.
I’ll be back in a year or so to tell you you off.
The price of oil in the short term is influenced by the paper market; speculators and traders.
The price of oil in the long term is influenced by the physical market; supply and demand.
Demand for oil has NOT plummeted. It continues to grow by roughly 1 mbpd per year, with the exception of recession years. Oil demand dropped in the recessions of 2009 and 2020. Other than those two years, demand continues to grow.
Global demand grew 2 mbpd in 2023 and 0.9 mbpd in 2024.
The IEA expects world oil demand to grow by 1.1 mbpd in 2025 to 103.9 mbpd.
https://www.statista.com/statistics/271823/global-crude-oil-demand/
Geez, do you really know much about da oil boldness?
The US doesn’t have to “drill baby drill” to increase production at all.
There are thousands of drilled but uncompleted wells that can be completed and put into production depending on prices and markets.
Lol! I can’t help but laugh at your “knowledge” here.
Yep. I closely follow the number of DUCs on a regular basis. And the numbers have been slowly declining over the last few years as oil prices declined. There are always DUCs. Some are never completed because there wasn’t enough oil to justify completing them. Some will be put into production eventually, but are waiting for “something”; that “something” could be a dozen different things; like a complete pad and series of wells in a fracking field; pipeline access; higher oil prices to justify completion of a marginal field; someone else willing to purchase and complete the well; etc.
The number of DUCs has fallen from around 4000 to around 2500 over the last two years. You seem to think that this is a lot of wells. Are you aware that there are over 900,000 producing wells in the US?
https://www.statista.com/statistics/607725/number-of-drilled-but-uncompleted-oil-and-gas-wells-in-the-united-states-by-oil-play/
I forgot to mention that we drill over 20,000 wells per year.
https://www.statista.com/statistics/965763/number-of-oil-and-gas-wells-drilled-in-the-united-states/#:~:text=In%202017%2C%20there%20were%20an,will%20be%2022%2C600%20wells%20drilled.
SPY closed at an all time high. SPX closed at 6,118.72. A large bar/ low vol.
Trump has swallowed his own Kool-Aid. He sincerely believes that because he is President, the powers of the universe have opened up to him. He exaggerates the power of the office because it suits his ego. As much as I like Trump, I sometimes have the feeling that he operates in an alternate universe created by his own mind. Added to this is his propensity for creating “newsworthy” items by declarations he makes, and you have a torrent of misinformation and disinformation coming from the man.
Again, I DO like Trump — I think his bombastic nature is perfectly suited for the figure of 21st century politiican — but he goes too far too often, and the media is an able cultivator of this grievous flaw in its reporting-cycle.
You can read more of my writings by going to: dark . sport . blog — on the net!
“Trump has swallowed his own Kool-Aid”, face it Trump is mentally ill.
Any bets on whether rates are higher or lower a year from now?
I won’t take that bet. Neither will Jay Powell.
When the Fed CUT rates last year, the 10-year Treasury yield jumped from 4.40% to 4.50%,and now is at 4.65%. Boy, the Fed sure knows how to cut rates. And these are folks who completed the 4th grade too. At least, that’s the word on the street.
For these educated folks, keeping the U.S. dollar strong is of prime importance, isn’t it? After all, since 1913, the dollar has ONLY lost 96% of its value. Not down to 0% yet, but we can feel the hot breath on our necks though, can’t we?
Welcome to The Apprentice Goes to the White House show!
The drama in this episode: Trump browbeats Powell! The threat: “Watch out or ‘You’re Fired!’” Didn’t this work in Trump’s first term?
The upshot: Powell can only lower short-term rates. Maybe heightened inflation expectations will cause long term rates to go up. Ho-hum — inverted term structure again. Why is that a big deal?
Count me a skeptic that Powell has strong levers for controlling inflation. He has stated in testimony before Congress that the Fed doesn’t really understand inflation. Maybe changing interest rates is simply the Fed’s mode of conducting monetary theatre. I’m not sure there’s a lot of drama or substance there.
The Fed’s theatre is for the investor class, and Trump’s is for the masses. If I was betting, I’d bet that Trump wins this confrontation.
When I was a kid, mortgage rates were 1-2% and housing boomed [unlike the 16% we saw under Carter & real estate sales fell…historically, when interest rates are low, the economy seems to do better so this may not be a bad idea.
Interesting. When were you a kid? 30 year fixed mortgages became popular around 1971. Since then:
30 Year Mortgage Rate in the United States averaged 7.72 percent from 1971 until 2025, reaching an all time high of 18.63 percent in October of 1981 and a record low of 2.65 percent in January of 2021.
Reality is what I say it is.
In the 40’s 15Y mortgage rates were around 2.5%. In the 50’s the gov authorized 30Y mortgage rates. The average mortgage was 4%.
My Dad got one for less than 2%-that’s REALITY
In the 50s my friend; tell me the economy wasn’t booming then! Guess many here have short memories…Oh, Carter did such a grea
Lol! You must be so old that you are suffering memory loss. According to this, mortgage rates averaged 4% in the 1950s. So you either have dementia, or you’re full of shit. And I don’t give a FF about Carter.
https://www.noradarealestate.com/blog/historical-mortgage-rates-since-1950/#:~:text=The%201950s%2C%20when%20mortgage%20rates,%2C%20education%2C%20and%20social%20programs.
After the Six Days War Nasser shut the Suez canal for a decade. In Oct 1973
King Faisal imposed an embargo on the US and confiscated ARAMCO.
Inflation popped up until the end of Iraq/Iran war. New discovery of oil fields in Alaska, the North Sea, the Gulf of Mexico and in Russia tamed inflation. In the 50’s and the early 60’s mortgage rates were low, The US dollar ruled the world. The Dow biggest stock was GM. The globalists were Ford and GM expanding all over the world. Senator Ribicoff & Ralph Nader sacked GM and Detroit….
Old Man Daley knew what Ribicoff was at the ‘68 Convention.
You left out that King Faisal through the Arab League offered full diplomatic recognition of Israel if it withdrew to the UNSC Resolution 242 (1967) borders and recognized the Palestinian state. That offer is still on the table. Trump thinks he can cut a deal with Saudi Arabia through his “Abraham Accords”. The Saudis may not like Palestinians, but they understand that the ME will have no peace as long as Israel continues to expand.
“1-2%”
Is this an SAT question- are you 4 years old?
More merde from the orange buffoon somehow he assumes everyone is a maga idiot.
Better than a Biden/Harris boot locker like you
My boots are chocolate flavored!
IMO, the spread between prime rate and the commercial interest rate (commercial and private) will grow even larger The criteria for even the most favored borrowers will grow. Basically, the lower interest rates will be to pay on the federal debt.
This Show just keeps getting better every day. It is already far exceeding my expectations. I’m enjoying it immensely.
Ain’t it great?
The Greatest Show on Earth!
And the good news is that Trump is getting a ton of great things done.
Hopefully he accomplishes everything he promised to do, great or not. Then we will see how it all works out. It’s a fascinating experiment.
Whatever happens, I’ll come out of it a trillionaire!
I would take whatever he says with a grain of salt, it’s akin to the sticker price of a car at the dealership.
The Fed will cut rates to ease gov debt payments. Demand for highly skilled
and skilled workers will rise, after the next correction. Tariff will protect our
most important national industries. Higher tax collection from highly skilled
and skilled workers along with tariffs will fill gob coffer. The Fed will help the
new gov to cut debt fast….A good economy lift all wages ….
Rotation from consumption to production ….
And the reason to get back rates to zero is because the CRE defaults are now past the 2008 GFC levels and we all know how that ended.
https://cred-iq.com/blog/2025/01/09/office-distress-rate-eclipses-17/
Got PUTS?
Trump has that covered. All government workers have been ordered back to the office.
And he also wants to sell all government buildings….that will saturate an already dead market.
https://www.newsmax.com/newsfront/donald-trump-selling-government-buildings/2025/01/21/id/1195961/
Government employees only deserve to work outside.
The rents on government buildings are being paid with or without the employees there so that shouldn’t really move any needle…plus it’ll take at least a full year to execute. Will probably take 24 months start to finish.
Meanwhile all the competent people will find WFH jobs, leaving the dregs. This will prove that government is evil!
Speaking of Trump, I hope nobody put their life savings into $Trump or $Melania.The latter has set a new low every hour since Inauguration day.
Meanwhile, my advice to stock up on Bitcoin last summer when it was a ‘bargain’ at under $60,000 has turned out to be a good call.
$meliana to the moon!
How embarrassing for the US. First we have a corrupt demented leftist puppet and now a narcissistic economic illiterate. Can he really be that fucking stupid?? God help us. He has a lot of good ideas but bloviates like a retard on stupid things, maybe because he thinks it will stimulate the unwashed masses to adore him??
narcissistic economic illiterate…in fairness, Biden was that too
You are so lucky – under Trump, you are permitted to use the word “retard” now. Unlike just 4 months ago, under the wandering one.
Biden proved markets don’t work! We need a magnificent businessman like Trump to set interest rates and all other prices! We can’t trust those Biden DEI appointed CEOs to set prices. Finally, a real conservative in the White House. MAGA!
I hope this is satire. Although does satire still exist in Trump’s Republican party?
What exactly makes Donald Trump a conservative? What is he conservative about? Ronald Reagan was a conservative, Jack Kemp was a conservative, and the poster child for a conservative is Mitt Romney. A true conservative personify conservatism in everything that they do, their financial life, their personal life, and their political stances. A conservative, by the time that they are in the later stages of their life will likely have had long and stable marriage, their business/financial life will be absent scandal and failures, and their politics will be driven by long-held ideals, respect for institutions, and they will see their most valued attribute being that you can trust their word.
Not sure where you got “poster child” from, but Mitt Romney is NOT a conservative, he’s a RINO by a large number of metrics.
He does keep up superficial appearances.
The irony is that fiscally, the most conservative president in a long time has been Clinton….Trump is no conservative and it would not surprise if he goes with price controls along with interest rate controls.
The last conservative was Ohio Senator Robert Taft. None of the people that you mentioned.
I thought it was Ike…..
Ike didn’t know what he was until someone told him. Fred is right about Mr Republican Taft.
Those characteristics are for a moral person and you mix up the definition of a moral person with a conservative.
One and the same! Encyclopedia Britannica: ” “Conservatism, political doctrine that emphasizes the value of traditional institutions and practices.” Traditional institutions would include marriage, organized religion and the related moral teachings, and the virtue of honesty and strong character.
Trump says he wants lower oil prices and lower interest rates, one should read that as: interest rates and oil prices must not climb higher. He’s low balling everything, tariffs you name it. By his nature he is inflationary but his voter base cannot tolerate much more inflation.
His “voter base” does not matter any more. They have served their purpose.
Untrue! Despite their individual poverty, as a group, the serfs still possess a lot of assets that should belong to me. While they have no political use at this point, we can use them to intimidate other people, and of course, there’s always the ongoing grift.
I am going to be richer and more powerful than any man in history… seig heil!
If Windows Bill Gates was building cars 125 years ago we’d all be riding horses and bicycles now.
Most of them are carrying 75lbs of fat. They’ll last the winter, at least.
Not going to suffer through more than 60 seconds and the interest rate remark was not in the first 60 seconds so i will just take your word for it
Such a statement is pretty amazingly stupid. I mean you CAN set the Fed Funds rate lower. And the Fed CAN then use the Open Market desk to make that happen
But they cannot control long rates even if they wanted to
In any event the Fed does not set rates anyway. As Gundlach says, they follow the 2 year. Not literally, but they have to conform even to what short market rates tell them to do
It is troubling Trump does not get any of this. Presumably Bessent has enough spine to set him straight in a cabinet meeting
What worries me more is he also seems to be buying the CIA BS about Ukraine as well and there is no one to set him straight n that issue
Stop complaining…. This is the promised golden age!
Re “As Gundlach says, they follow the 2 year. “
This is demonstrably incorrect. The Fed dragged the short end of the curve higher and higher in 2022, with the bond market kicking and screaming every step of the way, as the Wall Street shills desperately and repeatedly tried to persuade someone, anyone that rates were going to come down again, in order to unload to greater fools.
When the Fed appears to be following the short end of the curve, it’s only because they’ve telegraphed their response function to the market to avoid disruptions (and/or to enable market front-running…) The market anticipates what the Fed will be doing, but it does not control the Fed.
Now ask yourself why Gundlach might want you to believe that his beloved bond market controls the Fed…
To you are correct except this “In any event the Fed does not set rates anyway. As Gundlach says, they follow the 2 year. Not literally, but they have to conform even to what short market rates tell them to do.”
Gundlach is wrong
To understand why, see the Fed Uncertainty Principle
https://mishtalk.com/economics/fed-uncertainty-principle/
Hi Mish. Do you have a square on your bingo card for Danielle Smith becoming Prime Minister of Canada to make all of this go away vis-a-vis Trump?
Alberta Premier Smith calls for diplomacy as Trump eyes tariffs | Edmonton Journal
The next Canada PM will be Pierre Marcel Poilievre unless he dies before the election.
I agree that interest rates should be set by the market. But if some idiot must set interest rates then the idiot should be Trump not Powell. And if Powell disagrees then he can be replaced or the Federal Reserve can be ended.
Interest rates should be set by the market, and existing anti-trust laws should be enforced with the big two credit card companies.
Oh, lets go back to the late 1800s before the Fed. What a great time! Yo Yo interest rates, inflation, and frequent recessions and depressions. Sounds great!
There was no inflation.
You are very wrong! There was low “average” inflation over the fifty year period from 1850 to 1900, but if you look at the volatility of inflation year to year you would see a highly volatile inflation environment that swung sharply from deflation to high inflation.
I’ll give you the illiterate Economic prize for that post.
Bring it! 🙂
The incoming Trump administration has made it clear that it plans to pursue drastic reforms to the federal workforce, and Sherk is poised to be central to those efforts. Trump has vowed to “shatter the deep state” and make it easier to fire ‘rogue bureaucrats.’”
This is how a recession happens, millions and millions of people out of work as the federal government contracts. Not to mention the culling of the federal workforce. Argue all you want about whether the government should be spending so much or be the largest buyer in the country, but those people have mortgages and auto loans, they spend money at grocery stores, gas stations, restaurants, and Amazon.
Tough s$$t…they can join real life and compete with the extra 10 to 20 million people they helped bring into the country.
Yep, they were out there smuggling them through tunnels like the Underground Railroad. Jim the postal carrier was a threat to American Soverignty!
He knows and you should know he knows that he cannot and does not set interest rate policy. Not sure why he still triggers the blogger, this bombastic stuff is no different than last time. He says lots of stuff every day 24×7. He said this same thing previously. They all want 0% interest. Obama had it for 7 years and 11 months of his 8 year term so he didn’t have to say he wanted it.
Goodness the guy lives in lots of folks’ heads every day.
Gonna be fun(?) watching the face melts every day when people get worked up by the free streaming open mic approach to a presidency yet again.
Its engagement farming.
… and here you are engaging. Gold star for you!
As I said for weeks, Trump will ensure that interest rates go to zero. This is for two reasons: 1) the rich whom he considers himself part of want to continue, as they have since 2008, to buy up America — take America private. No starter homes? Stocks and bonds at all time highs? Half the NYSE disappearing from competitors buying competitors? Thats because with hundreds of billions of free 0% money for the best credit risk hedge funds and private equity, they can buy up America for a song. And 2) all governments at all levels have borrowed like drunken sailors and cannot afford to pay ANY interest rate on their debt. So, Midnight and all the others who doubted me, Trump (and dictators dont give a hang about inflation) will make free money available to the top 5000. You little pipsqueaks will rent and be paid minimum and like it.
We know. You have said it ad nauseam. And you are still wrong. He doesn’t control interest rates and you will have to admit as much. Why aren’t rates already at zero then? When will be zero. Give me a time.
It’s a fact that in early-2019, Trump criticized and browbeat Powell relentlessly at every opportunity to reverse the fed’s cycle of rate hikes because stocks were starting to tank.
And at the time he was right. Rates were too high in 2019. They aren’t too high today. There is a difference. He can say whatever he wants.
ASAP
Good. So in 1 year when rates are no different and nowhere near 0 you can admit you don’t know shit. Keeping receipts.
I would advise against looking back… we don’t’ have control of this forum, so the history of it can’t be refreshed to consistency with the New Truth.
If he had Carly Fiorina as his VP come in with the HP printers it would have been too obvious.
“Just look at that face!”
We’ll be happy little tenants and sharecroppers.
The ultra-left has overplayed its hand, and now it’s Trumps turn.
It promises to be a tumultuous four years.
I predicted something like this a few weeks ago. Trump is addicted to debt and low interest rates. But even if the Fed slashes the fed funds rate to 0% tomorrow, the ten-year (around which so many loan rates are based, like mortgages) could continue to hover around 5%.
To lower the ten-year, the Fed would have to do buy via quantitative easing, right? Quantitative easing is an emergency crisis-era tool that seems insane to deploy with assets priced to absolute perfection. Yet here we are.
At the same time, cutting taxes is going to balloon the deficit/national debt, though some here will argue that tax receipts actually increase under lower tax rates due to increased business activity. In today’s world, color me skeptical.
I have a position in a bond fund BLV that I’ve been wanting to liquidate, but I don’t know whether to crap or wind my wristwatch anymore. Tough to make thinking decisions in this environment. Will team Trump/Fed/QE or the bond vigilantes prevail?
Don’t you see the emergency? I might not be a trillionaire by the end of my term!
He isn’t cutting taxes necessarily. He’s extending the tax cuts from 2017. Without doing so it would be the largest tax increase in American history.
You’re playing a game of semantics. Those 2017 tax cuts were unnecessary and contributed bigly to the current asset bubbles and $36T national debt.
Nothing I said is incorrect. That you didn’t like the cuts is a you issue
If they do nothing, tax rates will go back up. To extend current rate is to cut taxes from where they are scheduled to go.
Trump will use (like Biden) short interest bonds tu buy 10years bonds to lower the rate.
Plus the whole world needs dollars,so the dollar is strong enough to support falling rates.
When you have so much debt issued,you need to lower the rates,and this will support the bond market too!
“What a pompous, economically illiterate speech”
This description is applicable to most speeches given in Davos.
Let’s remember that the largest borrower is the US government.
Trump is just getting ahead of the impact of his clean up of government. He will cut gov costs, which will cause gdp to fall. So his cost pressure will result in the fed lowering rates; not because of his words, but his actions. He’ll just look smart and powerful as a result. The fed should do this to lessen recession risk.
Pain for the serfs, tax cuts for the rich… it is indeed the golden age!
The tariffs are designed to destroy demand. 3D chess
“There is a cult of ignorance in the United States…[It is] nurtured by the false notion that democracy means that ‘my ignorance is just as good as your knowledge” (Isaac Asimov, 1980)
My people!
Maybe someone should have listened to Trump WEF video which includes Q&A at end.
He spells out in plain English how energy will be the cornerstone of where he takes policy. Taking policy to a level of doubling current electric capacity of US.
Once these things got underway then interest rates would follow as inflationary pressures subside.
It was terrific. Yes. But Mish has a hard on for anything Trump says that is nonsensical. So be it. It was 50 minutes and Mish took one line. Tis life.
Mish can not be everywhere so he is missing what is going on.
Pushing back against where things have gone driven by NGO agendas that differed from US core interests will take some time.
Push back is real and it has the force of everyday people behind it.
Even comatose GOP is growing a set.
Another example, it would appear Hesgeth has the votes for confirmation.
Fetterman split with party ideology and will go that road back to a Centrist Dem.
Risk of being redundant but Milei speech examines the course we are on as different from course had been on.
I enjoyed Milei speech as well
Agenda for next four years is difficult to absorb for many people.
However once it proves itself out there will be happy faces on those who prospered.
As Bessent acknowledged during his confirmation hearing it is not about green energy it is an energy Race going on globally.
Trump is moving US forward based upon energy needs of the new economic manifestation currently unfolding.
Europe is determined to miss the boat once again as they think they can meet energy demands of 21st century economy with Green
He did call out BoA and other bankers for de-banking people for political reasons. When all that was going down I joined a credit union as a backup. I don’t do any political stuff but I could see people getting de-banked for refusing vaccines when the firings started for refusing it.
As for interests rates he has no ability to impact consumer rates. At least not anytime soon.
Nazis should be free to bank in this country, as our forefathers intended!
Oh look, politicians ask and answer all the time from September
“President Biden on Thursday hailed the Federal Reserve’s move this week to begin cutting interest rates”….what a fucking shock. Meanwhile the Fed should never have cut at the time but tried to politically help the Democrats.
What percentage of Trump’s voters are too dumb to realize Trump is asking for ZIRP and no inflation, which is not going to happen? Your readers here, and most people who are even capable of discussing basic economics, are five levels above those Trump voters who will not be able to figure out how badly they are being rag-dolled.
He’s not going to get it so who cares what he asks for. He doesn’t set interest rates. SO this is all much ado about nothing.
You’re sounding desperate, minion. Turn up the smug!
I heard he will be getting rid of Powel and put someone else in there. It’s not good.
He has threatened that but cannot legally do so until Powell’s term expires
June 2026
He has also threatens to deny federal dollars to left-leaning locales…
also illegal…
but talking shit appeals to his base.
Stupid, angry people make the most loyal followers.
You left wing wing nuts always state anything Trump tries to do is illegal.
All Congress had to to is to tie funds to enforcement of US Federal Law.
No enforcement and no funds.
Simple, legal, and effective.
Maybe actually put an outsider as Chair and someone from the real world who understands how markets and economics actually work……
Dictators dont care about inflation
Biden sure didn’t.