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President Donald Trump knows exactly who is to blame for the Tanking economy: the president of the federal reserve, Jerome Powell, who did not access Trump's whims to reduce interest rates to brighten up the economy.
For almost everyone – including Jay “M. Too Late “Powell, in Trump's latest nickname – the culprit is just as clear: Trump himself, who threatened, implemented, suspended, exchanged and degenerate prices like so many wallpaper samples.
The White House deals with the debate as if it were not as unilateral, while trying to act as if each new declaration of the secretary in Trump or the Treasury Scott Bessent represents a coherent policy. For a president obsessed with the stock market, the reprimand of investors is particularly spicy.
Since Trump took up his duties, the shares have sang, the bond market has gone wobbly and the dollar is lower. On Tuesday, the International Monetary Fund revised its forecasts, increase The chances of a 37% recession compared to its previous 25% marker. It is more conservative than the evaluation of Americans – 42% of which believe that the economy is already in recession or in economic depression, according to the last vote.
All this helps to explain why Trump in the last 36 hours seems to have dropped out of a cliff of his own manufacture – saying that he “no intention” to dismiss Powell, a few days after having published “Powell's termination cannot come quickly enough!” (To be clear: if a president can deposit the head of the Fed is completely not tested. The markets are unequivocal terrified by Trump, even trying to do so.)
Meanwhile, Bessent told a speech behind closed doors to Jpmorgan Chase which he expects a de -escalation of the trade war with China, where American policy adds 145% to imports and which China collaborates on an additional 125%. “None of the parties think that the status quo is sustainable,” said Bessent in remarks on Tuesday that disclosed As expected and sent booming markets. (The Bessent effect is real, like Bloomberg notes; On the days when he is headlining of the economy, the markets go upwards.)
Here is the thing: investors are looking for a certainty. This is why the United States is the main destination from afar for foreign direct investments, recording more than 5 billions of dollars in non-Americans assets. To put this in perspective, it is around 10 cents of each dollar IDE invested on a global scale, according to to IMF data.
On Tuesday, Wall Street joined Trump and Bessent's remarks, but you are talking to anyone in Washington in contact with the main investors and it is clear that no one takes these declarations so reliable for more than a few days. For the moment, things seem to continue to run in the wrong direction. IMF forecasts lowered American economic growth to a meager 1.8% this year, against 2.7% expected. (In the last calendar year of Biden, the economy grow 2.8%.)
Trump, too, seemed to realize that things were going poorlyBut he continues to blame Powell, which could reduce borrowing rates and juice of the trigger economy. Such a decision, however, risks reducing inflation, which is persistent concern. Central inflation – which excludes very volatile food and energy prices – is at its lowest rate Since March 2021.
On Wednesday, Bessent used a gathering on the sidelines of an IMF event in Washington to pay the lip service to the unique grievance of Trump, while trying to calm the markets.
“The IMF was once unshakable in its mission to promote global monetary cooperation and financial stability. It now devotes disproportionate time and resources to work on climate change, sex and social problems,” said Bessent. He also blamed the “mission flumant” not to do more to maintain the world economy in balance – often to the advantage of the United States.
In a follow -up meeting With financial journalists, Bessent said that de -escalation with China is a priority, but the leaders of the two countries are not in talks and that an agreement cannot be negotiated with the subordinates. He also suggested that Trump's team would see him as a victory if a general executive is implemented without any hard agreement.
The White House continues to sell all this like a hiccup that will not stop the registration of a new golden age of manufacturing, because companies realize that they prefer to invest in factories here than pay import taxes. The real culprit, in the spirit of the west wing, remains Powell. Or at least, it is a viable place to unload the blame. The white house press secretary Karoline Leavitt told journalists on Tuesday that the Fed unnecessarily maintained the stable rates “in the name of politics, rather in the name of what is good for the American economy”.
Among those who look at the Fed and the billions of dollars which he moves to Wall Street, the story that the White House tells does not correspond to reality. And while investors are preparing for the bill because of Trump's confrontation with, well, the world, the constant changes in the administration are beginning to stifle the messages themselves.
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