The Campaign to Fire Jerome Powell; Joe Biden, Clueless at the Carlyle Hotel
Author: Greg Valliere
June 19, 2019
JEROME POWELL, ON THIN ICE: If the Fed doesn’t cut interest rates today — the central bankers probably will not — we would anticipate a furious reaction from President Trump, who clearly loathes Powell, who he appointed. Trump wants two things: a weaker dollar, which allegedly could reduce the U.S. trade imbalance, and interest rate reductions, which may come later rather than sooner.
TRUMP RANTED YESTERDAY about comments from Mario Draghi, the European Central Bank Chairman, who indicated that more monetary stimulus is possible in Europe. Trump wants more stimulus in the U.S., and we fully agree with a Bloomberg piece yesterday that indicated he wants to fire Powell, or demote him — removing him as Chairman, making him a mere governor.
NO VOTE OF CONFIDENCE: Asked whether he wanted to oust Powell, Trump said yesterday “let’s see what he does,” apparently referring to this afternoon’s FOMC decision and press conferece. If there’s no rate cut — just a hint that one might come if necessary later this summer — we think Trump will immediately intensify his public relations war against the Fed Chairman. This likelihood, of course, could make the Fed less inclined likely to cut rates.
WE PREDICTED EARLIER THIS SPRING that Trump will attempt to fire Powell this coming winter, but it could come sooner than that. As we noted, the law is vague on whether a president has the authority to fire agency heads, but Trump could cite malfeasance or other transgressions; the fallback would be to simply demote Powell.
TRUMP HAS STATED that the single greatest threat to his re-election is Powell, and we think the harassment will become so intense that it could force the Chairman to step down, despite Powell’s assertion that he would never resign. The ultimate irony: Trump had the most dovish Fed Chair in our lifetimes, an Obama appointee, and he fired her.
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JOE BIDEN, TONE DEAF: The 76-year-old former vice president spoke at a fundraiser on Tuesday night at the Carlyle Hotel in NYC, where the lowest priced room costs a mere $926 per night, including taxes. Ad-libbing, which is dangerous for Biden, he waxed nostalgic about the the U.S. Senate decades ago. Biden cited the “civility” shown to him by James Eastland of Mississippi and Herman Talmidge of Georgia. Both were opposed to integration; Eastland in particular was considered a virulent racist.
BUT THE SENATE WAS ABLE TO GET THINGS DONE, and he learned to work with others, Biden said, according to a summary in this morning’s New York Times that is certain to rekindle criticism that he’s clueless. Eastland, he said, “never called me ‘boy,’ he called me ‘son,’ ” said Biden who, of course, is white. He’s the shakiest front-runner in recent memory, just one major gaffe away from imploding. Biden will clarify his remarks at the Carlyle, but his strong support among African Americans is likely to slip.
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