Trump swipes at Powell, dollar sinks, gold soars.
Truth Social Rip
Truth Social Link: “Preemptive Cuts” in Interest Rates are being called for by many. With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?
Trump Rattles the Markets
CNBC reports Trump demands ‘loser’ Fed chair lower rates ‘NOW’
Trump’s latest salvo against Powell — whom he appointed during his first administration — came as the president and his team are studying whether they can legally fire the central bank leader before his term expires in May 2026.
Powell has flatly stated that the president cannot remove him under the law.
Any attempt by Trump to fire Powell would likely trigger a steep sell off in U.S. equity markets, Evercore ISI Vice President Krishna Guha told CNBC on Monday.
“If you start to raise questions about Federal Reserve independence, you are raising the bar for the Federal Reserve to cut. If you actually did try to remove the Federal Reserve chairman, I think you would see a severe reaction in markets with yields higher, dollars lower and equities selling off,” Guha said on “Squawk Box.”
Can Trump Fire Powell?
Bloomberg asks Can Trump Fire Powell?
President Donald Trump is again raising questions about whether he will seek to limit the Federal Reserve’s independence, as new tensions flare in his contentious relationship with the central bank.
A president can’t dismiss a Fed chair easily, legal scholars say. Section 10 of the Federal Reserve Act says members of the Fed’s Board of Governors, of which the chair is one, can be “removed for cause by the president.” Legal scholars have generally interpreted “cause” to mean serious misconduct or abuse of power.
Whether a president can strip a governor of the chairmanship is more ambiguous because the law doesn’t explicitly provide the “for cause” protection for that role, said Peter Conti-Brown, a professor and Fed historian at the Wharton School of the University of Pennsylvania. Regardless, because of the “for cause” protections for governors, stripping a Fed chair of that title might mean the individual could remain on the board. It also might not remove such an individual from another powerful perch: head of the Federal Open Market Committee, or FOMC, the policymaking group that sets interest rates. Its members, not the president, choose who leads it.
Powell’s term as chair is set to expire in 2026, while his 14-year term as a governor is scheduled to end in 2028. That presents Trump with one of two scheduled opportunities to name appointees to the Fed board. Another is set to come in January 2026, when Fed Governor Adriana Kugler’s term expires.
But those positions represent a small slice of the Fed’s 19 policymakers — all the Fed governors and the presidents of the 12 regional Federal Reserve banks. The regional presidents are selected not by the president, but by directors of the individual banks, subject to the approval of the Fed’s Board of Governors.
Is Trump Foolish Enough to Push the Envelope?
Of course. The law has little meaning to Trump. This is proven.
But “yes” does not imply that I believe he will.
Polymarket thinks there is only a 20 percent chance for 2025. That is likely as good a guess as any, and better than most.
Trump is a bully who backs down when punched. And Powell has announced he will not go if trump tries to fire him. This is why the odds are only 20 percent.
Nor will Powell be intimidated by Trump into cutting rates. But Trump can easily do anything on a whim or out of anger, so firing Powell is definitely possible.
Case for a Free Market
There should not be a Fed. The free market would do a far better job setting rates than the Fed.
But the Fed is far better than political hacks taking over things. Trump has no idea of the damage he is causing.
Q&A on Inflation and Trump
Q: Have we seen a rise in inflation yet?
A: No, because all importers font ran the tariffs
Q: So there might be a lag in inflation due to tariffs?
A: Yes, and the data collection itself lags.
Q: What about declining oil prices?
A: That is probably Trump’s strongest point. It’s very disinflationary.
Q: Food?
A: Farm labor deportations and tariffs are a positive push on food inflation.
Q: What about rare earth elements?
A: Trump is playing with fire. China controls about 50 percent of supply and 90 percent of processing. We should not be in this position but we are. Even in a sinking economy prices could jump dramatically.
Q: What about Technology?
A: You tell me. Tariffs are on again, off again.
Q: Does anyone have any idea what Trump will do with reciprocal tariffs?
A: Of course not. Trump could back down further or totally disrupt supply chains where importers cannot get much of anything at any price.
New York Fed President Expects Tariffs to Boost Inflation
On April 11, I noted New York Fed President John Williams Expects Tariffs to Boost Inflation
I now expect real GDP growth will slow considerably from last year’s pace, likely to somewhat below 1 percent. With this downshift in the pace of growth, I expect the unemployment rate to rise from its current level of 4.2 percent to between 4-1/2 and 5 percent over the next year. I expect increased tariffs to boost inflation this year to somewhere between 3-1/2 and 4 percent.
China Halts Rare Earth Exports Desperately Needed by the US
On April 13, 2025, I commented China Halts Rare Earth Exports Desperately Needed by the US
I have been warning about this for years. It’s now happening.
Fed Chair Powell Warns of Higher Inflation and Slower Growth Due to Tariffs
On April 16, I commented Fed Chair Powell Warns of Higher Inflation and Slower Growth Due to Tariffs
The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.
Tariffs are highly likely to generate at least a temporary rise in inflation. The inflationary effects could also be more persistent. Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices.
Final Q&A (One Repeat Q)
Q: Does anyone have any idea what Trump will do with reciprocal tariffs?
A: Of course not. Trump could back down further or totally disrupt supply chains where importers cannot get much of anything at any price.
Q: Given the above, plus known reporting lags, plus uncertainty over the meaning and timing of reciprocal tariffs, what should the Fed do?
A: Wait
There is a significant chance of stagflation even if it’s not the base case.
And if the market senses a premature or unwarranted cut, yields on the long end of the curve will soar.
I am not a Fed apologist. But I am not a Trump apologist either. What the Fed does not want to do is make an error in either direction and have to reverse it.
Taking responsibility for the consequences of Bernanke’s and Yellen’s political manipulation of the dollar would inevitably lead to Powell being a “Major Loser.” There was no other possibility.
Isn’t it just as political to not lower rates because you disagree with tariffs or Trump? In the gray areas, it’s always political. I see arguments for both, but it’s all politics when you don’t know anything or aren’t sure of anything. Mish has already stipulated these people don’t know what they are doing. If they don’t know, then it’s all political, is it not? As a matter of fact, it invites politics into the decision. So is it about swaying opinions at this point? Is our fed acting on opinion, not facts?
The Fed is data driven. But it looks at data over time. Not just what happened yesterday.
Mish, your blog is deteriorating, along with your mind, you need to calm down, quickly.
So why are you here? Just go over to Zerohedge with the rest of the lunatics.
@Mish : As much as you would like to conclude Trump is foolish, because he is pushing for Rate cuts on Powell + doing tariff’s.
But guess Powell had a reason to cut 50bps and not 25 bps/0bps.
This is the same Powell , who couldn’t see any asset bubble while govt printing couple of Trillion and he was doing rate cuts.
As much as i hate to see my 401k getting destroyed, for sanity of future we might be better growing real economy than financial economy ( PE rollups + Multiple expansions, yuan carry trades, dropshipping, shall i count AirBnb )
Powell was following increasing slack in labor demand, fearing it was a sign of impending recession. He was wrong. The labor market tightened right after the cut.
I agree with your point on wait in2020. But seems like powell is no better than a street dog, who starts increasing after all the inflation in world + asset prices peaked in feb 2022. He had 2021, where he was sleeping
There goes Donnie Darko again. Blaming everyone else for his bad decisions. At least Powell isn’t intimidated or seeking favoritism like all the psycophants in the cabinet. Hey, I think I just invented a new word. Look at me!
Letting Trump play Erdogan on the Potomac may well be the right recipe to get rid of Trump and his flunkies come 2028. Americans couldn’t stand single digit inflation for a few months (the inflation was caused by transfers into their very pockets).Let’s see how they going to deal with double digit inflation for several years.
The MAGA cult forced everyone at voting gunpoint onto the Trumptanic™, a dilapidated hole ridden vessel powered by Turdonomics™ with pirate Somali captain & crew. They decided to change things up and smash the ship directly into the iceberg for a change. What idiots.
We all know how this story will end with the Trumpocolypse™ – no point in blaming the Fed, this is 100% Trump & GOP self-induced catastrophe. 100%
Trump is politician.
Politicians don’t lie if you don’t know the truth.
Politicians don’t make mistake. They just put blame on others.
All Trump needs to do for markets to recover is shut up for a few days. When he’s not sending out idiotic tweets, the market recovers. i am sure he or fam is shorting hte market ahead of these tweets.
it’s literally guaranteed profits, right?? he and everyone knows if he tweets something screaming about Powell, markets will tank. Nothing we have seen over the many decades of his life lead me to think he would turn down guaranteed millions/billions by not profiting from a completely risk free move.
Not bombing Iran would also help.
Watch for Trump making big investments in oil futures. A couple hundred thousand dead Iranian kids is worth a few billion. Am I right?
I agree with Trump. If he could get Powell to go away, the markets would rejoice.
He lowered it under Biden bcause inflation was down, tariffs=inflation. Also, he didn’t say he wont’ lower, and there’s def no reason for an emergency cut
he’s such a crybaby wimp who can take no responsibility for anything.
Also the notion that Powell is playing politics… remind me which POTUS appointed him as Fed Chair??
Trump is just Lizz Truss on steroids at this point, speed running our collapse.
Why anyone in the US wants to listen to her on speaking tours is beyond me. Same for BoJo. Both promoted way beyond ability.
Dear TrumpCo: I want two make a statement… TOO you directly about Powell Being TO LATE.
It takes TOO to tango and TU BE OR NOT TU BEE.
Et TOO, Brute”
Trump nominated Powell for the position when he had wise consul. Powell saved trump during covid and there is no way Powell should save trump from the disaster he is making of the economy. Let the world see what trump is doing and let them see fast so he can be removed from office.
Powell is an exceptionally gifted person with experience character and an intimate knowledge of the business cycle.
The whole world need to let the bully trump twist in the wind so we can get rid of him…
No one will be removing Trump from office.
They voted him in. Take a good look at the Congress – they voted him in, and then handed him their power.
El Salvador didn’t allow a U.S. Senator to see inside their mega prison that’s wrongfully housing one of his state’s residents. But they allow lots of influencers to film propaganda videos.
I’m concerned about people thrown into prison without due process, but from a purely crass political point of view, wanting MS-13 members brought back into the US probably isn’t the best look for democrats.
Without due process, there is no way to know if this guy is MS-13 or not. Republicans jumping to conclusions without any facts isn’t a good look either. But unfortunately it’s come to define the modern Republican party.
Oil at the futures level has gone down about $6.00/bbl since the election. At my favorite gas station prices have gone from $2.96 up to $3.29. Since I live in the midwest which is supplied by oil from Canada our prices are up significantly. I assume other readers have their own stories of gas prices falling?
Anyone? Anyone? Bueller? Bueller?
Across the U.S. gasoline supplies are rising as the economy slows. This will effect inflation to a degree and counter some of the pass through of tariffs to the consumer.
Prices will rise but there will be mitigation.
More importantly the oil patch will suffer as now Russia and Iran are now pumping and shipping more oil and ignoring sanctions. What can trump really do about Russia shipping oil since he is at war with everyone in the world. Serious business people can not take trump seriously as it is obvious that he is incompetent to negotiate faithfully or keep his word. The oil patch has already seen 18,000 laid off… Soon margins will collapse and another wave of driller bankruptcies is looming.
US shale company breakevens for new wells is around $65/bbl. Drilling activity will slow at prices below that point. Yes; the oil patch will suffer as a result.
Agreed, however at that point the U.S. is getting the cheap energy it wants while conserving it’s own for future use. Not the worst thing, if you don’t work in the patch that is.
Low oil prices are even better for China. They import 11 mbpd.
The US imports 6.5 mbpd of heavy oil (and exports 4 mbpd of light oil).
So?
You do the maths.
China is now exporting its currency to buy oil. Lots of it and none from the U. S. Recall when we established the petrodollar as the worlds reserve currency by buying oil? Lots of it…
Yes another shift is coming.
Elections have consequences.
If the US is capping wells at $65bbl then they too are exporting the already accepted world reserve Petro dollar, and lots of it. So?
re “Energy costs way down” -Trump
Prices on Nov 05 2024 and today:
• Avg Price of Gas at pump: 2.98 3.04 +2% source: stLouisFed.org
• WTI futures: 71.00 62.36 -12%
• Nat Gas futures 2.67 3.05 +14%
Do not expect trump to tell the truth about anything…
Is being wrong (or not right quickly enough) the same as lying?
If so lots of people on these pages are really big liars.
Is money currently expensive by historical standards, or only by the standard of the last decade or two of “Bubbilicious” finance? Wasn’t that many years ago I’d have been thrilled with a 7% mortgage. Now that grenades are detonating in trade, are we all “looking forward” to what comes next…the air being let out of residential housing value?
There is over $315 Trillion of global debt. Companies need to make money to pay the debt back. Governments need to collect taxes to pay the debt back. Consumer need a job with good income to pay the debt back. (many do not even make enough to pay any Federal taxes). It seems like we are all going to have to put in 60 hour weeks to make this happen? Haha.
Are the people who hold the $315 trillion of debt worried at all that his may or may not get paid back? As of now…..it does not appear as if they are worried. And that is crazy.
Isn’t price of Gold reflecting this concern?
What do you think is crazier:
Expecting that 315 Trillion WILL be paid back?
-or-
Expecting that 315 Trillion will NOT be paid back?
If it’s paid back with devalued dollars is that really even being paid back?
I think that’s the whole idea isn’t it?
What is annual interest and principal on that debt and how does that relate to world GDI?
And most of that debt is ours. But, hey, if we can just get these genZ’ers jobs as influencers, which is their main ambition, that debt will just evaporate.
I am looking forward to watching the effects of Trump’s tariffs play out on the entire US economy. It’s going to be quite the show.
A real time economics experiment that we can learn from.
Last week it was the tech execs that made the pilgrimage to the WH to explain how tariffs would hurt them. Before that it was the auto execs. This week it’s the retail execs.
What a show!
You and I agree on something Papa dave, looking forward to see how this all works out
It is good to agree on some things. Though we might be expecting different outcomes.
If the Fed won’t cut rates then Trump will weaken the dollar the way he is able to, by bashing Powel. Come on guys why can’t you see the obvious and pontificate on the true subject matter?
Yes. It’s genius. 5d chess. A low dollar will bring in more tourists and make people in other countries want to buy our goods.
Except that Trump has pissed them all off so they won’t buy our goods or travel to our country now.
Brilliant!
Cheaper exports, etc. etc. which combats Tarriff/flation
Nothing 5d, or even 4d for that matter.
They don’t care too much about price. When you piss off your customers, they won’t buy from you.
Yet we have still been buying from China?
That dog don’t hunt
Plaza Accord 2.0.
No need to negotiate.
Well done!
I don’t go to the US because i love Trump,i go there because i love Jazz.
Won’t boycott jazz because of Trump,will still buy US music.
So your assessment can be wrong.
Powell is a dunce who doubled the f’ing money supply.
When Powell was appointed by Trump he said: “ Jay has considerable talent and expertise. His wisdom and leadership will guide our economy. He knows what truly drives American success.”
Donald knows how to pick’em.
Appointing Powell may be trumps only good decision…
ok Trump gets his way and he appoints whomever; than what? Rates go to zero? Ok than what ? Honestly I’m asking because I dont know (other than basic 101) about this circus show.
Inflation takes off, the currency nosedives and gold continues it’s upwards trajectory. Trump has no idea what he is doing.
Grift, golf, bully, brag.. rinse repeat for the next 4 years
You forgot lie and blame others!
;-))))))))
On the other hand… pussy-grabbing.
In Trump’s list of things going down he forgot the financial markets. How many trillions of dollars in Wealth have been destroyed in his pursuit of tariff Nirvana? Funny how he was able to predict everything that was going to happen except for how the Fed would react? He is turning out to be quite the fool.
Ironically $7TT in wealth destroyed by Trump’s Consumer Tax War. That’s the amount Bessent said would be easy to collect annually on Tariffs and pays for itself if/when they eliminate the IRS. But it’s a stretch to claim that our $3TT annual imports will remain at that level with 140% average tariffs, the number that would be required to yield $7TT in tariffs. But why would a MAGA voter ever check basic arithmetic as part of their “fact checking?”
I took a look at Margin Debt a couple of weeks ago . How much of that 7 trillion was just leveraged bets and thus paper wealth that was going to disappear with any market correction.
https://yardeni.com/charts/margin-debt/
So he’s promising us a “slow” economy? Most Presidents wouldn’t say that out loud.
And when did eggs become Biden’s?
Don’t you remember Biden going around with his Chicken SS Troopers, murdering chickens all night every night? /s
That is when they weren’t eating peoples cats!
Failure and blame shifting are Trump’s defining characteristics, and have been for his entire life. What heights shall he rise to before this is over?
After the Dudley column and the Sep cut, it’s quite clear the fed is also part of the swamp that needs to be drained. But I still like JPow holding off on cutting rates until after the economy tanks. We need a good recession to clear out the dead wood.
The geriatric toddler needs impeached asap
We would need conscientious GOPers in Congress for that to happen, but nice thinking.
https://www.newsweek.com/donald-trump-impeachment-resolution-issued-texas-2060344
2015…2016…to January 2021 – Orange Man Bad
Interlude – orange man bad
November 4 2024 …January 20 2025 … present – Orange Man Bad
and yet, many of the Orange Man Bad people have been / still are long on the stock market.
Anyone here know what the VIX is? Pretty darn low from mid-December to mid- February. Best to leave the bar before they turn on the lights.
Correct, trump is ugly and you can’t drink that pig pretty! But right on the subject and stop trying and run!
yes, but Orange Bad Man got elected by Hombres Pendejos😂
Trump needs to look no further than his mirror to determine who the real “culprit” is tanking the financial markets and the economy.
Why does no one have the backbone to stand up to him?
“because retaliation is real. And that’s not right.” —Republican US Senator Murkowski
https://www.reuters.com/world/us/republican-senator-murkowski-threat-trump-retaliation-we-are-all-afraid-2025-04-17/
Murkowski hiding her lack of courage behind fear. How cute. How do we elect such chickens?
Murkowski, and Collins, are the worst. they cal him out, often can cast a deciding vote and then chicken out.
and what is this “retaliation”? they get primaried. ok , so what?? they’re both massively wealthy and old, if they don’t get reelected it’s not like some massive tragedy for them.
Because their lack of morals overpowers their sworn duty to the US Constitution
Actually they do and are having trade meetings leaving trump sitting at the White House with no invitation. Isolating the U.S. from trade is the Elephant in the room.
You should read up on “patrimonialism” – to learn how the US govt is changing now.
The peace and calm of the Easter weekend has ended. 2 whole days without Trump in the news headlines is over.
Trump is back to SHRIEKING again and piercing reality with his loud chaos. Calling for Powell’s head on a platter.
The markets are sending a message loud and clear. Gold up over $100. Stock markets CRASHING.
This calls for Trump to label Powell a MEGA LOSER!!!
Trump is a jerk but I think he’s actually right about rates needing to come down. Powell should be cutting short-term rates because the global recession – that Mish anticipated last year – is finally arriving.
China’s been in a long recession, and Europe caught the bug recently. Now it’s the U.S. turn.
The U.S. recession probably would have started in 2023, but the huge Federal deficit spending spree papered over the problem. That policy finally reached its limit and now it’s time to pay the bills for years of poor choices.
If you truly believe what you’re writing, then it makes sense from your POV to argue for rate decreases.
But Trump says his policy changes are all good and will lead to more jobs, income, tax revenues, etc. for the US. So why should he argue for rate decreases if we’re headed for more growth already?
Or do you think he understands economics and central bank rate policy like Turkey’s Erdogan?
Interesting comparison.
The first rule is to focus on what they do, not what they say.
Some form of recession is inevitable because the deficit spending is unsustainable.
To fix the deficit requires spending cuts and/or tax hikes, all of which result in taking away money that someone else was counting on as income.
The trade deficit is similar, all that cash being exported in exchange for goods is income to someone, somewhere. Tariffs don’t just come out of consumer’s pockets, they come out of corporate profits too. (The corporate execs all get this, even if Mish doesn’t.)
So cutting deficits is inherently recessionary, but government officials will not talk about that because it’s unpopular. Resurgent growth is a partial antidote to the implied profit recession, so they talk about the resurgent growth. Cutting interest rates is another partial antidote, so they’ll talk about lower rates, but they won’t justify it by talking about the recession.
Many sacred cows and golden geese are going to be slaughtered. There’s not much question of how many, just whose, when and how. But you can expect those who own cows and geese to whine about it all the way down.
Still seeking wisdom, I see.
Trump was handed a strong economy from Biden. If Trump then destroys the economy and then further, demands the FED lower interest rates because of his destruction, don’t you think that would be Bizarro World logic?
Trump was handed a ticking time bomb, not a “strong economy”. A genuinely strong economy wouldn’t be dependent on unprecedented deficit spending.
The FED cannot be responsible for the arbitrary and capricious actions of the Executive branch.
Powell should raise interest rates, not only because this would be proper policy with inflation set to increase strongly but also to spit in Trump’s eye.
Can only imagine how apoplectic Trump would be. Lol
Everyone should recall that Trump badged Powell during his first term in the same manner. It’s Trump’s SOP.
However, Powell has stated that he would battle to his last nickel against any effort by Trump to dispose him.
You meant to say “to your last nickel”
Wrong! Best to research before making snarky replies.
My bet is he doesn’t even battle to his FIRST nickel.
Be interesting to find out, hopefully we don’t need to.
So you’re unable to admit that you were wrong and now you throw out YOUR personal opinion as if it holds any weight in the world.
Newsflash Dave, no one cares what you think.
It’s so nice having a man child as president.
Unfortunately for the Fed they played politics with their ridiculous 50bps cut in September ahead of an election….Thus no tears for them now. Can’t have it both ways.
What you said means nothing. Tears for the Fed would help them or change things HOW? Please don’t tell us that Trump would employ the EQ he has none of to sense that people wanted him to change his stance and so he did, as any sophisticated statesman would do. Unless you’re just in it to make people chortle.
Wait! What?
Jerome imposed the tariffs?
Color me confused.