In the wake of Fed Chair Jerome Powell’s speech Friday morning at Jackson Hole, WY, President Trump launched a firestorm of aggravated statements on Twitter. This included blaming Chair Powell for not aiming to lower interest rates far enough.
Donald Trump: “As usual, the Fed did NOTHING! It is incredible that they can “speak” without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the U.S. will do great…”
Then he followed it by saying, “….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”
Further, President Trump reiterated the abuse China has caused to the United States through its trade measures. Rightly so, but the way he reacted and dealt with it is reproachable and outright dangerous to our economy.
Donald Trump: “Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far….”
However, the frosting took to the cake when he said this—causing the Dow to drop 460 points, or 1.8%. The S&P 500 and NASDAQ Composite fell 1.9% and 2.2%, respectively.
Donald Trump: “….better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..”
Donald Trump: “….your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,….”
Seriously? Even CNBC reporters reconfirmed during this hour that the president is not a king and has no constitutional authority to dictate how private U.S. companies will do business. I am not surprised at the least from the president’s rhetoric. He says stupid things whenever his temperament amounts from something negative.
UPDATE [08/24/19]: Trump Comments on Statement to “Order” U.S. Companies
The following day on Saturday, Trump reiterated his statement on Twitter after being questioned by the media. He claimed the Emergency Economic Powers Act of 1977 give him authority to do so.
Donald Trump: “For all of the Fake News Reporters that don’t have a clue as to what the law is relative to Presidential powers, China, etc., try looking at the Emergency Economic Powers Act of 1977. Case closed!”
I rejected his argument by replying that such an act, whether upheld in court, is unconstitutional.
CHRIS NAWOJCZYK: Guess what: YOU’RE NOT MY KING. We already revolted against one in 1775. Conservative values include free market capitalism via laissez faire economics, not dictatorial powers. Whatever manipulation of EEPA you claim, whether upheld or not, is #UNCONSTITUTIONAL.
Silver and Gold Soared as the Stock Market Fell, as Always
Furthermore, silver and gold stocks and ETFs shot up in the wake of the Fed Chair and president’s statements. However by 0900 there as a slight selloff.
The VIX CBOE Volatility Index actually hit a low of 16.04 before 1100, only to soar up to a high of 12.93 by 1200 noon. If President Trump just acted more “presidential” by showing more bearing and leadership in his public sentiments, the markets may not have reacted as they did. Right now in August, which is often a volatile month, the drastic rise and fall of U.S. securities is largely the result of fear and emotion rather than fact and reason.