With the yield curve on the 2-year/10-year bond yields inverting for the first time since 2007 on Wednesday and the hashtag #TrumpRecession trending No. 1 nationally on Twitter, President Donald Trump took a shot at one of his favorite whipping boys: Federal Reserve Chair Jerome Powell.
In a string of back-to-back tweets, Trump said our problem isn’t with China, it’s with the Fed and its “clueless” chair, Powell.
“We are winning, big time, against China. Companies & jobs are fleeing. Prices to us have not gone up, and in some cases, have come down. China is not our problem, though Hong Kong is not helping. Our problem is with the Fed. Raised too much & too fast. Now too slow to cut,” Trump tweeted. “Spread is way too much as other countries say THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game!
“CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!”
Trump has spent months bashing the Fed and Powell for raising interest rates too fast, and then not lowering them fast enough — which goes against conventional wisdom when we have “the greatest economy in the history of our country,” as he often says.
For the second straight week we’ve had a day that was the worst day for trading of the entire year after Wednesday’s sell-off ended up being even worse than the one on Monday, Aug. 5.
By closing time Wednesday, the Dow fell a staggering 800 points, or 3%, the S&P 500 also fell 85 points, or 3%, and the Nasdaq fell 242 points, or another 3%.
The reason for last Monday’s sell-off was Trump announced another round of tariffs on Chinese imports the Friday before. However, he called them off on a number of products and investors celebrated big gains on Tuesday before Wednesday’s bloodbath.
Last month, the Fed lowered interest rates — to the 2% to 2.25% range — for the first time since the 2008 financial crisis.
