Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
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Twitter ‘Wrath of Trump’ targets Fed
Michael O’Neill
FX Trader, Loonieviews.net
Summary: Someone did something to President Trump’s cornflakes. He started his day in a sour mood and took to Twitter to rail at the Fed.
He tweeted “Despite a Federal Reserve that doesn’t know what it is doing - raised rates far too fast (very low inflation, other parts of world slowing, lowering & easing) & did large scale tightening, $50 Billion/month, we are on course to have one of the best Months of June in US history... ...Think of what it could have been if the Fed had gotten it right. Thousands of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!
St Louis Fed President James Bullard is Trump’s kind of Fed chair. He was the only Federal Open Market Committee member to vote for a rate cut at last week’s meeting and he explained his rationale in a statement, Friday. He said rates should have been cut because: a) Headline, and core PCE Inflation measures are running 40-50 points below the FOMC target of 2.0% and the forces keeping rates low are unlikely to be solely transitory. B) US economic growth is expected to slow for the remainder of the year.
President Trump appears to be planning to monetise its Middle East foreign policy. This morning he tweeted “China gets 91% of its Oil from the Straight, Japan 62%, & many other countries likewise. So why are we protecting the shipping lanes for other countries (many years) for zero compensation. All of these countries should be protecting their own ships on what has always been.... ....a dangerous journey. We don’t even need to be there in that the U.S. has just become (by far) the largest producer of Energy anywhere in the world! The U.S. request for Iran is very simple - No Nuclear Weapons and No Further Sponsoring of Terror!
Trump’s Twitter tirade didn’t help US dollar bears. The greenback has ground out small gains across the G10 major currency spectrum since New York opened. GBPUSD is the biggest loser but that appears to be all due to EURGBP demand. The EURGBP uptrend from the beginning of May is intact while prices are above 0.8790, looking for a break through resistance in the 0.8950-70 area to extend gains to 0.9060.
St Louis Fed President James Bullard is Trump’s kind of Fed chair. He was the only Federal Open Market Committee member to vote for a rate cut at last week’s meeting and he explained his rationale in a statement, Friday. He said rates should have been cut because: a) Headline, and core PCE Inflation measures are running 40-50 points below the FOMC target of 2.0% and the forces keeping rates low are unlikely to be solely transitory. B) US economic growth is expected to slow for the remainder of the year.
President Trump appears to be planning to monetise its Middle East foreign policy. This morning he tweeted “China gets 91% of its Oil from the Straight, Japan 62%, & many other countries likewise. So why are we protecting the shipping lanes for other countries (many years) for zero compensation. All of these countries should be protecting their own ships on what has always been.... ....a dangerous journey. We don’t even need to be there in that the U.S. has just become (by far) the largest producer of Energy anywhere in the world! The U.S. request for Iran is very simple - No Nuclear Weapons and No Further Sponsoring of Terror!
Trump’s Twitter tirade didn’t help US dollar bears. The greenback has ground out small gains across the G10 major currency spectrum since New York opened. GBPUSD is the biggest loser but that appears to be all due to EURGBP demand. The EURGBP uptrend from the beginning of May is intact while prices are above 0.8790, looking for a break through resistance in the 0.8950-70 area to extend gains to 0.9060.
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