Trump's tariff saga
- Post number 2
What happened on Friday with the Fed?
On Friday, after China's response was published by raising tariffs by 34%, the indices reacted by deepening declines in pre-market trading.
This was the moment all eyes turned to Fed Chair Jerome Powell, hoping he would save the market.
How?
This already happened in 2020 when the market aggressively plunged; the Fed announced an emergency package which included an interest rate cut and the distribution of a lot of money to calm the market.
Expectations were that the Fed would at least hint at a move that was on the table.
This caused President Trump to pressure him on social media to cut interest rates.
It didn't help.
Powell not only remained silent but also made 'market-unfriendly' statements.
Powell said that Trump's tariffs are higher than expected, which puts at risk higher inflation and lower economic growth.
Here are selected quotes "It is too early to say what the appropriate path for monetary policy will be."
"Our duty is to keep long-term inflation expectations well anchored and to ensure that a one-time increase in the price level does not turn into a persistent inflation problem."
"While uncertainty remains high, it is now becoming clear that tariff increases will be significantly larger than expected."
"This is likely true for the economic effects, which will include higher inflation and lower growth. The size and duration of these effects remain uncertain. While it is very likely that tariffs will produce at least a temporary increase in inflation, it is also possible that the effects will be more persistent. Avoiding this scenario depends on keeping long-term inflation expectations well anchored, and how fully prices will pass through."
The Fed is going head-to-head with President Trump.
And the market?
Did not like it. At all.
This brought us to another nightmare day in the markets, with screens glowing red, everything being sold aggressively without any sentiment or mercy.
This is an ongoing story - investors will continue to closely follow the Fed's actions in the coming week in line with market performance; it is very possible that the key to changing the market's direction lies with the Fed.
We will continue to update here - continue to follow and share so your friends receive professional content during this period.
In the next post - a full and in-depth analysis from the channel's team on the current state of the trade war + preparation for the coming week with possible scenarios + a bonus interesting assessment from one of the world's largest and most respected investors.