Trump wants the lowest interest rates in the world. Not low rates. Not competitive rates. The lowest. As in, he checked every country's central bank website and needs America to beat all of them.
This is the same guy who just called Kevin Warsh "fantastic." Warsh runs the Federal Reserve. The Federal Reserve sets interest rates. So Trump praised the rate-setter while demanding different rates and accusing other Fed officials of "bad intentions." That's like telling your chef he's brilliant while screaming that the kitchen is trying to poison you.
The "bad intentions" line is doing heavy lifting here. What intentions? Did Jerome Powell's ghost sneak back into the building to raise rates out of spite? Are there rogue Fed governors meeting in a basement, cackling over basis points?
Retail traders saw this headline and immediately bought rate-sensitive stocks. They read "lower rates" and started fantasizing about cheap mortgages and tech rallies. They did not read the part where the President is arguing with his own appointee's colleagues while that appointee stands there being fantastic.
Warsh probably woke up Monday thinking he'd have a quiet week. Then his boss went on television to compliment him, contradict him, and accuse his coworkers of sabotage. Fantastic.
The chart doesn't care if Trump thinks rates should be lower. The chart doesn't care if Warsh is fantastic or terrible or moderately competent. The chart moved before this headline existed and it'll move after you forget you read it.
But sure, trade the news. Buy because Trump said "fantastic." Sell because he said "bad intentions." Then check your account Wednesday and wonder why the market didn't consult the President's adjectives before picking a direction.
Photo by History in HD on Unsplash
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