Opinion: Trump’s war on the Fed could shatter the stock market

Opinion: Trump’s war on the Fed could shatter the stock market

Donald Trump and Jerome Powell in November 2017. Last week, President Trump stunned Wall Street when, within a day of a quarter-point cut in the federal-funds rate by the Federal Reserve, he pledged to slap 10% tariffs on $300 billion in Chinese imports. On Monday, when the yuan fell below seven to the dollar, the U.S. declared China a currency manipulator , in a major escalation of the trade war. In the five trading days ended Monday, the Dow Jones Industrial Average DJIA, +0.44% slumped more than 1,500 points, the S&P 500 index SPX, +0.55% lost almost 6%, and the Nasdaq Composite Index COMP, +0.85% plunged nearly 7%. Monday was the worst day for stocks so far in 2019. (U.S. stocks recovered somewhat early Tuesday.) Besides putting more pressure on China, I believe Trump’s escalation of the trade war is aimed at trying to push Fed Chairman Jerome Powell to cut rates more. The president’s many attempts to control Fed policy threaten the central bank’s independence and present a grave danger for markets and investors. Read Tim Mullaney: This time could be different: Trump might not back down and calm the markets Since appointing Powell in 2017, the president has tweeted some 40 times about his displeasure with the chairman for not cutting rates fast enough to keep the economy growing, sometimes even threatening his job. (Powell has politely but firmly pushed back.) Trump has opined on Fed policy far more than any recent president in what is becoming […]

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