(WCTW) Disconnected From Reality
The only obvious observation you can make today is that the Trump administration is disconnected from the realities of its own tariff policies.
What changed this week? A lot, and it never seems dull.
This time, Trump's attention has turned to the Federal Reserve's very own Jerome Powell. Despite the many flaws the Fed has, it has served one important function for the market: autonomy/independence and transparency.
The transparent nature of the Fed policies these days helps market participants gauge just where we are headed, and the latest communique all but spells a simple message to the market: the Fed will remain patient.
This is the obvious takeaway, and judging by Trump's reaction over the weekend in trying to replace Powell tells you everything you need to know about what the market is going to do next.
The broader messaging was clear:
Tariffs will be inflationary.
The Fed needs to keep interest rates higher to dampen the inflationary impact from tariffs.
Just today, Trump once again attacked Powell for his slow response, resulting in more selling in the market.
The last thing the market wants right now is 1) trade uncertainty and 2) Fed uncertainty. By trying to blame the Fed, Trump is inevitably sowing the seeds for his trade policy demise.
Whether that's in the form of another spike in treasury yields or a material fall in the stock market, what's obvious to me is that the market will force this on Trump.