Tag: Federal Reserve

Trump targets ‘pathetic’ Federal Reserve after worst manufacturing reading in a decade

President Donald Trump again attacked the Federal Reserve on Tuesday after the weakest U.S. manufacturing reading in 10 years.

In a tweet, the president wrote Fed Chair Jerome Powell and the central bank “have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected.” He contended the Fed has set interest rates “too high.”

“They are their own worst enemies, they don’t have a clue,” he wrote. “Pathetic!”

As his trade war with China rages on, Trump has repeatedly blamed the Fed’s interest rate policy for concerns about a slowing U.S. economy. He has contended the central bank has not moved quickly enough to ease monetary policy — though the Fed has cut its benchmark funds rate twice this year.

The Fed did not immediately respond to a request to comment.

Trump’s tweet comes after the Institute for Supply Management’s manufacturing reading fell to 47.8 in September, down from 49.1 in August. A reading below 50 shows a manufacturing contraction.

The poor economic data contributed to major U.S. stock indexes sliding Tuesday.

The dollar index, which measures the U.S. currency against a basket of global currencies, has climbed more than 3% this year and sits near its highest level since mid-2017. A stronger dollar relative to global currencies is generally expected to reduce exports and increase imports, hurting manufacturers because it makes their products more expensive overseas.

While exchange rates may have contributed to the drag on manufacturing in September, trade also did, according to ISM.

“Global trade remains the most significant issue as demonstrated by the contraction in new export orders that began in July 2019. Overall, sentiment this month remains cautious regarding near-term growth,” Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said in a release announcing the data.

Trump has repeatedly downplayed any concerns about a looming American recession. He has also contended his trade conflict with the second-largest economy in the world will not harm businesses or consumers — despite indications that it has already started to hurt some companies and worry Americans.

Seeing concerns about a flagging economy as a ploy to discredit him before the 2020 election, Trump has claimed the central bank bears the blame for any slowdown rather than his own policies.

[NBC News]

Media

Trump blasts Fed for not helping manufacturers

President TrumpOpens a New Window. on Tuesday continued to take on the Federal ReserveOpens a New Window., saying the central bank “loves” to watch American manufacturers struggle.

“The Federal Reserve loves watching our manufacturers struggle with their exports to the benefit of other parts of the world. Has anyone looked at what almost all other countries are doing to take advantage of the good old USA? Our Fed has been calling it wrong for too long!”

Trump has heavily criticized the Fed and its chairman, Jerome PowellOpens a New Window. multiple times over the past several months. The president’s biggest issue with the Fed is over the size of its latest interest rate cut. While the central bank lowered the benchmark federal funds rate by a quarter-point last month, Trump has repeatedly called for a larger cut.

Meanwhile, manufacturing activityOpens a New Window. across Mid-Atlantic States showed little improvement in August, according to data released Tuesday from the Federal Reserve Bank of Richmond.

“The composite index rose from -12 in July to 1 in August, buoyed by increases in the indexes for shipments and new orders,” the survey found. “However, the third component, employment, fell. Firms reported increasing capital expenditures and inventories, but the measure of local business conditions was slightly negative. Manufacturers were, however, optimistic that conditions would improve in the next six months.”

The survey indicated that while wage growth continues, firms were having difficulty finding employees with the necessary skills for open positions — and it anticipates that both of these trends will continue. Also, “many firms saw employment decline while the average workweek increased in August,” according to the survey.

[Fox Business]

Trump calls Fed Chairman Jay Powell ‘enemy,’ compares him to Chinese President Xi

President Donald Trump significantly ramped up his criticism of Fed Board Chairman Jay Powell on Friday, describing his longtime target on economic issues as an “enemy” and likening him to Chinese President Xi Jinping.

“My only question is, who is our bigger enemy, Jay Powel or Chairman Xi?,” Trump wrote, misspelling Powell’s name. 

Trump has repeatedly blasted the Fed, even before his election. But his long-standing dissatisfaction with the Fed, which he accuses of bungling the U.S. economy, has increased amid concerns over a global economic slowdown. Trump nominated Powell as chairman in 2017.

The president’s tweet came as he prepares to head to France on Friday for the G-7 meeting of world leaders, where trade and the economy will be atop the agenda. 

The Fed, an independent board whose members are appointed by the president, raises interest rates to cool down a hot economy and cuts them to stimulate a sluggish one. The rates affect how much it costs to use a credit card, sign a car loan or buy a home.

Trump this week has upped the ante in his year-long campaign to browbeat the Federal Reserve into slashing rates, calling for the central bank to lower its key short-term rate by “at least” a full percentage point “over a fairly short period of time.”

For good measure, he has added that the move should be accompanied by “perhaps some quantitative easing as well,” referring to the Fed’s massive bond purchases during and after the Great Recession to lower long-term rates. 

Trump again voiced frustration with the Fed on Wednesday, tweeting that Germany “is actually being paid to borrow money, while the U.S., a far stronger and more important credit, is paying interest.”

[USA Today]

Trump hammers Federal Reserve, cites commentary from Fox Business

President Trump on Wednesday spent a portion of the day at his New Jersey golf club blasting the Federal Reserve as stocks took a dive amid signs of a potential recession.

The president sent three tweets over a 90-minute span in which he quoted multiple Fox Business Network personalities who echoed Trump’s criticisms of the central bank and defended Trump’s tariff policy toward China.

Trump expressed agreement with Mark Grant, a guest on Stuart Varney’s show who suggested the Federal Reserve should act to boost the U.S. economy.

“Correct! The Federal Reserve acted far too quickly, and now is very, very late. Too bad, so much to gain on the upside!” Trump tweeted.

He later shared comments from Fox Business host Charles Payne, who criticized Federal Reserve Chairman Jerome Powell for his handling of the central bank.

“I agree (to put it mildly!)” Trump tweeted.

He also referenced a quote from Varney’s program which downplayed concerns over the ongoing trade war between the U.S. and China, arguing it had yet to negatively impact the American economy.

Stocks sank sharply Wednesday morning after the U.S. bond market signaled an impending recession. The dip came one day after Trump announced he would delay further tariffs on Chinese imports until after the bulk of the holiday shopping season, reflecting mounting fears that the trade war could derail the robust U.S. economy.

In a pair of tweets later in the afternoon, Trump emphasized that “China is not our problem,” saying the trouble lies with the Fed.

Trump is at his golf club in Bedminster, N.J., for the week, and he had no public events listed on his schedule for Wednesday. He has repeatedly hammered the Fed and Powell for its decisions to raise or lower interest rates, arguing that its decisions have held back the economy. 

“This guy has made a big mistake,” Trump said Tuesday at an event in Pennsylvania, referring to Powell. “He’s made a big mistake — the head of the Fed. That was another beauty that I chose.”

The constant critiques have worried critics, who note the central bank has historically been independent of politics.

[The Hill]

Trump parrots Lou Dobbs in flip-flopping attack on his own Fed chairman

On Wednesday night, President Donald Trump quoted Fox Business’ Lou Dobbs’ attack on Federal Reserve Chairman Jerome Powell for cutting interest rates — ironically, something that he has spent the past several months demanding that Powell should do:

Trump has been at odds with Powell ever since he appointed him to the role in 2018, accusing him of trying to stifle the economy.

[Raw Story]

Trump attacks US Fed, demands rate cut

President Donald Trump attacked the independent US Federal Reserve on Friday, demanding the central bank reverse course and cut interest rates — something it is widely expected to do this month.

In another Twitter outburst, Trump called on the Fed to “Correct!” its overreach.

“We are in a World competition, & winning big,… but it is no thanks to the Federal Reserve,” he said.

“Had they not acted so fast and ‘so much,’ we would be doing even better than we are doing right now. This is our chance to build unparalleled wealth and success for the U.S., GROWTH… Don’t blow it!”

The US central bank raised the benchmark borrowing rate four times last year but seems almost certain to pull back with the first cut in a decade at its policy meeting July 30-31.

Recent comments from Fed officials seemed to confirm the signal that policymakers are prepared to act to sustain US growth in the face of a slowing global economy and persistent trade tensions with China.

“You don’t need to wait until things get so bad to have a dramatic series of rate cuts,” Fed Vice Chairman Richard Clarida told Fox Business Network on Thursday.

That comment echoed a statement earlier Thursday from John Williams, the influential vice chairman of the Fed’s policy committee, who talked about the need to vaccinate when rates are very low.

[Raw Story]

Reality

The independence of a Federal Reserve is what gives its authority and a stability that is relied upon by companies and countries around the world.

Donald Trump is doing everything he can to undermine the Fed’s independence for short-term political wins.

Trump mocks Fed’s Powell: ‘He’s trying to prove how tough he is’

President Donald Trump on Wednesday flayed the chairman of the Federal Reserve, mocking Jerome Powell’s insistence that he won’t bow to political pressure when determining monetary policy.

“We have a man that doesn’t do anything for us,” Trump said in an interview on Fox Business Network’s “Mornings with Maria,” contrasting Powell’s decision to hike interest rates with the policies of places like China and Europe.

Trump has repeatedly hammered Powell over his rate hikes, prompting the Federal Reserve chairman to say in a speech on Tuesday that he would resist the political pressure emanating from the White House and the president’s Twitter feed.

A day after Trump accused Powell of acting like a “stubborn child” for not cutting interest rates last week, Powell defended the central bank’s insulation from politics — a signature facet of the U.S. financial system — saying that Congress aimed to avoid “the damage that often arises when policy bends to short-term political interests.”

Trump argued to host Maria Bartiromo on Wednesday that Powell “should’ve never raised the [interest] rates to the level that he raised them,” complaining that the Fed was constraining economic growth. And when Bartiromo brought up Powell’s remarks, the president responded with ridicule.

“So now he’s trying to prove how tough he is because ‘he’s not gonna get pushed around,’” Trump said mockingly. “Here’s a guy — nobody ever heard of him before, and now, I made him, and he wants to show how tough he is.”

And though Powell has halted rate hikes for the time being, saying last week that the Fed stands ready to cut rates, Trump continued to ratchet up his criticism. “Let him show how tough he is — he’s not doing a good job,” Trump said, adding that he was being “nice about it.”

Trump constantly complains that Powell has not pursued the easy money policies employed by countries like China, claiming that Beijing devalues its currency to keep the U.S. from negotiating trade deals on a level playing field.

His frequent criticisms have fueled rumors that Trump may try to fire or demote Powell, something he denied Wednesday even as he insisted he has the right to do so.

“I have the right to demote him, I have the right to fire him,” Trump said.

He then said the Fed is doing the opposite of what the European Central Bank under President Mario Draghi is doing and joked: “We should have Draghi instead of our Fed person.”

Draghi, whose term at the ECB ends on Oct. 31, earlier this month said that if the eurozone’s economic situation deteriorates in the coming months the bank would announce further stimulus measures.

The euro dropped 0.2 percent against the dollar within minutes of Draghi’s remarks, which caught the attention of Trump, who tweeted: “Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.”

Shortly after Trump added: “European Markets rose on comments (unfair to U.S.) made today by Mario D!”

[Politico]

Trump says he will nominate Herman Cain to Fed

President Donald Trump said Thursday he will nominate Herman Cain, the former Republican presidential candidate, to a seat on the Federal Reserve Board, a move surprising Capitol Hill and alarming Fed watchers.

“I’ve recommended Herman Cain. He’s a terrific man,” Trump told reporters in the Oval Office.

“I think he would do very well” at the Fed, the president added. “He’s a very good guy.”

A report that Trump planned to nominate Cain was reported early Thursday morning by Axios.

Trump has previously said he will appoint former Wall Street Journal editorial writer Stephen Moore to the Fed, but the White House has yet to send the nomination to the Senate. Moore and Cain would fill the two remaining vacancies on the Fed’s seven-member board. Trump’s interest in selecting Cain for the Fed was first reported in January. The president remains sharply critical of the Fed’s interest-rate policy even thought the central bank has shifted in a dovish direction. 

Trump said he was not trying to send a message to the Fed with the pick of Moore and Cain.

[MarketWatch]

Trump’s Pick for Fed Board Criticized As a Pro-Trump Partisan Hack

Yet again President Donald Trump has named someone to a top government post based on a commitment to toe the Republican line—and more specifically, to echo Donald Trump—rather than on sound policy goals.

On Friday, Trump picked his former campaign adviser and CNN commentator Stephen Moore to fill a seat on the Federal Reserve’s board of governors. Since then, it’s been difficult to find an actual expert in economics who thinks it’s a solid move.

Trump reportedly chose Moore, who was an economic pundit at Fox News before CNN recruited him, after the president was shown a March 13 op-ed Moore co-authored for The Wall Street Journal that echoed Trump’s criticisms of the Fed’s monetary policies, the Journal reported.

Trump has repeatedly criticized Fed Chairman Jerome Powell over interest-rate hikes by the central bank last year.

“The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!” Trump tweeted in December.

The same month, Moore said in an interview with the Journal that Powell should resign. “He’s totally incompetent,” Moore said. “If he’s not responsive to the president, then who’s he responsive to?”

A book Moore co-authored with fellow Trump campaign adviser Arthur Laffer, called Trumponomics, was “over-the-top” in its “enthusiasm for U.S. President Donald Trump’s sketchy economic agenda,” Harvard economics professor Greg Mankiw wrote.

Mankiw noted:

…Moore and Laffer apparently learned the importance of flattering the boss. In the first chapter alone, they tell us that Trump is a “gifted orator” who is always “dressed immaculately.” He is “shrewd,” “open-minded,” “no-nonsense,” and “bigger than life.” He is a “commonsense conservative” who welcomes “honest and fair-minded policy debates.” He is the “Mick Jagger of politics” with a contagious “enthusiasm and can-doism.”

Trump apparently was pleased, nominating Moore for a position that’s supposed to maintain a nonpartisan approach to policy. And the president, once again, has selected someone who hasn’t been thoroughly vetted, although he will need Senate confirmation.

Bloomberg reported the potential consequences of Trump’s pick:

Under the threat of constant second-guessing by the president, and potentially soon working with a Trump cheerleader inside the building, Fed officials may find it increasingly difficult to stay focused on keeping the institution at a distance from politics. That’s important because investors who purchase U.S. Treasuries trust the Fed to ignore the wishes of politicians and do what it thinks is best for the economy in the long run.

Some critics were a bit more direct:

In making the announcement (on Twitter, of course), Trump called Moore “a very respected economist.”

Gertz, a senior fellow at Media Matters for America, added that Moore “is the latest in a long line of TV news pundits to catch the president’s eye and garner a nomination to a powerful federal post.” He noted that Moore was a harsh critic of the Obama administration, calling at the time for tight monetary policy. Yet with Trump in office, Moore now has the opposite opinion and is calling for loose monetary policy, citing nonexistent deflation. This cherry-picking of facts seems to be a trend with Moore, who also is a visiting fellow at the Heritage Foundation.

Others strongly disagreed:

Reading between the lines, several observers already have pointed out that Trump’s move likely was made with a view to claiming a strong economy, at least on cable news shows, heading into the 2020 presidential election. It’s part of his “win at all costs” strategy to get re-elected.

That’s one way of putting it.

Here’s Moore in December 2017, arguing in favor of the Republican tax scam for corporations and billionaires. Moore said the plan would help middle-income Americans and small businesses:

[Splinter]

Trump might have renominated Yellen for Fed chair if she wasn’t so… short

President Donald Trump might have reappointed Janet Yellen to head the Federal Reserve if only she was a few inches taller.

A Washington Post report that quoted current and former officials said Trump on multiple occasions discussed giving Yellen another term at the central bank but was concerned over her height. He feared that at 5 feet and 3 inches she just wasn’t tall enough to get the job done.

The report said he expressed his misgivings to National Economic Council members and noted that Yellen “impressed [Trump] greatly” during their interview.

There have been some tongue-in-cheek comparisons made in the past to the height of Fed chairs and their propensity to raise rates, with 6-foot-9 Paul Volcker being the most aggressive. Powell is close to 6 feet tall.

Trump has been harshly critical of the Fed as its been run under Jerome Powell, whom he chose over Yellen. The president has objected to the interest rate increases under Powell, though Yellen also presided over hikes and the beginning of the reduction in the Fed’s balance sheet.

“Look, I took recommendations. I’m not blaming anybody,” Trump told the Post, despite reports that he blames Treasury Secretary Steven Mnuchin for recommending Powell.

[CNBC]

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