Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Peter Schiff: Trump Trumps Fed With Tariff Card

  by    0   0

The Federal Reserve’s modest rate cut last week disappointed President Donald Trump. He wanted more and he was quick to criticize Powell and Company. The very next day, the president trumped the Fed by slapping down the tariff card.

Peter Schiff talked about the president’s move in a recent podcast.

Trump took to Twitter right after the Fed announced its 25-basis point rate cut, tweeting, “What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world. As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place.”

The next day, Trump announced a plan to put a 10% tariff on the remaining $300 billion of goods and products coming from China into the United States beginning Sept. 1. This is on top of the 25% tariffs already levied on $250 of imported goods. Trump also fired off a litany of complaints about Chinese performance in the trade negotiations. With that news, everybody decided that Powell-talk notwithstanding, we’re going to get more rate cuts. The Dow dropped 280 points after Trump’s tweet and gold soared more than 2%, pushing up to about $1,446.

The Fed claimed the rate cut wasn’t the beginning of a sustained rate-cutting cycle. It was called an “insurance policy.” Peter said the real insurance policy was Trump’s tariff tweet.

I think the reason for the tweet was a lot more calculated than the financial media understands … I think what Trump was doing was trying to take out a bit of an insurance policy on rate cuts.”

Peter noted that the Fed mentioned the rate cut was because of uncertainty in the global economy, not concerns about the US economy. Peter called that a lie, nevertheless, that’s the rhetoric coming out of the Eccles Building.

So, if the Fed is worried about uncertainty in the global economy, why not give them something else to worry about? Why not up the ante on the tariffs? Why not throw another monkey wrench into the global economy so the Fed will be even more concerned than they were before, so just in case they were thinking about not cutting rates, now that we have these extra tariffs, well they’re definitely going to cut rates. So, I think that the warning and the message that Trump was sending was not to China, because nothing is going to happen there. There’s no progress being made with the Chinese. The warning sign was being sent to the Fed.”

Peter said Trump didn’t really need this insurance policy. The Fed is going to cut rates.

The economy is a mess despite what the Fed wants to say about how great it is, despite what Trump wants to say.”

As Peter pointed out, the actual economic data backs up his assertion. Just last week we got some more gloomy numbers.

Data showed the ISM manufacturing index dropped to 51.2% in July. That is the lowest level since mid-2016. Construction spending also declined by 1.3% in June. Meanwhile, jobless claims climbed modestly by 8,000 to 215,000 at the end of July.

The data is weak, yet everyone wants to continue to pretend that the economy is strong. Well, pretty soon, they’re going to have to stop pretending.”

Peter went on to highlight some of the market reaction to Trump’s tweet, particularly the bond market.

Gold IRA Rollover to 401k

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Peter Schiff: There Are Bubbles Everywhere and They’re All Going to Pop

The Dow pushed above 28,000 on Friday. The Nasdaq also closed on a record high above 8,500, and the S&P 500 made a new record high of 3,120. This despite some more gloomy economic data that came out during the day. Industrial production dropped more than expected, falling by 0.8 in October. Inventory numbers were […]

READ MORE →

Peter Schiff: The Stock Market Is Overlooking Bad Economic and Political Data

Stock markets made new highs on Wednesday, but as Peter Schiff explained in his latest podcast, there are a lot of cracks under the surface. The markets are surging forward even as they overlook bad economic data and chilly political winds.

READ MORE →

Peter Schiff: It’s Not a Great Economy Driving Stocks; It’s the Fed!

The Nasdaq and the S&P 500 closed on record highs Friday after a stronger than expected jobs report. But in his podcast, Peter Schiff said that the stock markets aren’t surging because of a great economy. They’re surging because of bad monetary policy.

READ MORE →

Peter Schiff: When Is the Market Going to Wake Up to this Con?

As expected, the Federal Reserve cut interest rates another 25 basis points on Wednesday. The mainstream read the post FOMC meeting comments to be relatively hawkish, saying Powell and Company seemed to indicate that future rate cutting is on pause. Peter Schiff opened up his podcast reminding us that just one year ago, the Fed […]

READ MORE →

Peter Schiff: Everything Old Is New Again

Years ago, markets used to pay a lot of attention to the money supply and trade deficits. Now, these numbers barely get a passing mention. In his latest podcast, Peter Schiff said he thinks what is old will become new again and trade deficits and money printing will once again come front and center.

READ MORE →

Comments are closed.

Call Now