TREND ALERT: The Trump Bump. Market Growth, No Recession

21 Feb 2019

TREND ALERT®
The Trump Bump. Market Growth, No Recession

KINGSTON, NY, 21 February 2019—While there is growing concern of a global economic slowdown, in the United States, with the start of the 2020 Presidential Reality Show®, measures will be taken by the Trump administration to keep the economy strong.

Indeed, the administration's campaign strategy will mirror the 1992 Bill Clinton message: "It's the economy, stupid." Already the battle lines between "socialist" Democrats and "capitalist" Republicans have been drawn.

THE RULER RULES

While parroted by politicians and the media that the U.S. Federal Reserve is an independent central bank whose monetary policy decisions are not subject to approval by the President, Trump's constant Fed attacks did not fall on deaf ears.

Beginning 19 July 2018, Trump initiated the assault, saying "I'm not thrilled with his raising of interest rates, I'm not thrilled."

Since that time, he continually blasted the Fed. Among the onslaughts: "Unfortunately they just raised interest rates … I am not happy about that;" "I'm very unhappy with the Fed;" "The only problem our economy has is the Fed;" "The Fed is foolish to keep raising rates;" "I think the Fed has gone crazy and is going loco;" "I think the Fed right now is a much bigger problem than China;" "I'm worried about the fact that they seem to like raising interest rates;" "I'm very unhappy with the Fed because Obama had zero interest rates;" "To me the Fed is the biggest risk, because I think interest rates are being raised too quickly."

And then, as the markets were registering their worst December since the Great Depression, Trump said: "The Fed is like a powerful golfer who can't score because he has no touch—he can't putt!"

While the Fed couldn't putt, Jerome Powell's U-turn on 4 January declaring the Fed would be "patient" in raising rates and doubling down on that later in the month, his about face has been characterized as the "Powell-Put."

Indeed, the world is following the Fed's lead. Across the globe – from China to the Eurozone, India to Australia, Ghana to Brazil, and Japan to New Zealand – under pressure from their leaders, central banks are taking measures to cut rates and/or inject more rounds of quantitative easing to prop up markets and economies.

TREND FORECAST: While interest rates are still relatively low after the Fed has raised them nine times since 2015, we forecast that the Fed will be under pressure to lower them as needed to maintain strong economic, equity and real estate markets throughout the 2020 election cycle.

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