That the president turned back in two hot issues – as he suggested in relation to Jerome Powell and China – was the magical recipe that toned the “animal spirits.”
Who fights is not dead, and Wall Street does not give up. The S&P 500 index rose from Tuesday to Friday; Hilvanó four consecutive wheels in positive, its most vigorous deployment since January. It is the second week on the rise. Its advance of 4.6% closely followed the Nasdaq escalation, 6.7%. The magnificent 7, hard mistreated by Trump 2.0, registered splendor flashes. Tesla gave the note on Friday with a 9.8%jump. In the week, Elon Musk’s company challenged the boycott and climbed 18%. And three of the mega-stars of once recounted more than 9%: Nvidia, Amazon and Meta. What revived the bag? It was necessary that the president retreated, and twice, so that the actions would take impulse again. There is no doubt that Trump and his toxic agenda is the problem that reveals Wall Street (and slows the world, according to the global panorama published by the IMF). The president had to be disadvantaged to make the light. That he turned back in two hot issues -as he suggested it in relation to Jerome Powell And with China- it was the magical recipe that toned the “animal spirits.” It was not only the bag that responded with desire, the treasure bonds and the dollar were also strengthened. What in past times was obvious, now constitutes a whole news.
Reculting with Powell and kindness with China
“I have no intention of saying goodbye to Powell”Trump said Tuesday. No one but him had thought of the possibility. It was not a misunderstanding, nor an acidic comment when passing, but an extensive written approach. “Powell’s dismissal can’t get quick enough”he had pointed out on social networks. In his opinion, the strong man of the Fed should have lowered the interest rates “a long time” and “had to lower them now.” Powell was not aware. Neither then nor now. Trump, an obsessive, insisted with a second very aggressive post. There may be a deceleration of the economy, “not an increase in inflation,” he warned, if “Mr. Too late, a large loser, does not lower rates now.”
Powell’s response was Radio’s silence. His said it a few days before: the Fed is in see and wait. The tariff rise was much greater than expected. And there is no hand history to estimate its effects. The Smoot-Halley law did not increase them so much and that happened in 1930. It is evident that Trump leads to the economy, and therefore to the Fed, to a muddy terrain that presents increasing risks of recession and inflation. If the Central Bank, which has a single instrument, the rate must intervene, will have to decide very well how to use it. At the moment, it is not trouble. The priority is obvious: preventing inflation expectations from being disagree. Lowering the rates in that frame, and doing it now, would be a folly. Rebobing the rise of tariffs, and removing the uncertainty that paralyzes trade and companies, is the right step. And that can do Trump on your own. Do not need Powell at all. But if he does not do it on time, if the economy clashes straight against the recession (or, worse, against stagflation) it will be convenient to have Powell and not have fired it (even if it is only to use it as a scapegoat). Hence the president is satisfied and archive, for the moment, the idea of removing it. But the public reappearance of Kevin Warshformer governor of the Central Bank, very close to Trump, with criticism of the role of the Fed, it is a sign that there is a plan B, even if it remains in the glove compartment.
“We will be kind to China”Trump also said in his second abrupt turn of the week. The Secretary of the Treasury, Scott Besentthe great influential today, prepared the ground. The current situation with China is “unsustainable,” he said. Hence, in “the very close future, there will be a decala.” We have to give “the world, the markets, a sign of relief,” he said. And so it was that Trump softened his rhetoric significantly. He talked about conversations with Beijing, and an alleged call from Xi Jinpingthat China denies that they have existed. In a later interview with Time magazine, Trump held the compound profile. He affirmed loose body that has already closed “200 commercial agreements”, and consulted on the reason why they are not announced, he said that “they are made and will be known in the next three or four weeks.”
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Economics and markets: the clock press
None of this can yet be corroborated. The only thing yes: the spin of speech. It is evident that after the Fiasco of the Day of Liberation, the increase in tariffs to Mansalva entered, at least, in a long waiting compass. And also that the virtual embargo situation that exists in commerce with China is needed to unlock. The “Apple exemption” that freed taxes to a wide range of electronic consumption products, from cell phones to laptops, was already seen. In a conversation with the CEOs of Wal Mart, Target and Home Depot, Trump was notified of the critical inventory position, the strong price pressures and the risk of shortages that are dejected on the retail trade. Surveying Powell would be to take more firewood and favor perhaps an uncontrolled fire.
But on the existing fire you have to turn it off the same, it is not enough to stop stunning it. Take measures to rebuild trust and regularize commercial flows and logistics at stable prices. That requires the art of the negotiation of the president so much. This week was accusing receipt and responding to a reality that is complicated, with the improvised art to retreat with elegance. But the clock is pressing. The markets demonstrated with their reaction that they want to believe, that they will accompany any sign of distension. They do not quote a recession yet, although 10% below its February maximum. Just in case, the S&P 500 did not abandon the correction zone yet. To get out of paralysis, and to overcome the slope, you don’t have to lower the rates. It is not Powell who maneuver too slowly, is the White House. Companies and consumers need to see the “deals” that Trump claims to have fastened everywhere. It will be enough with a couple of concrete agreements to strengthen credit. Acts, no words. That should be known before the economy begins to crush jobs.
Source: Ambito
