Will the Fed Become President Trump's Next Punching Bag?

(Bloomberg) -- On What'd You Miss This Week, Joe Weisenthal, Scarlet Fu and Julie Hyman tackled the busy week for the Federal Reserve. President Trump made market moving headlines by saying he "wasn't thrilled" with interest rate hikes in an interview. Peter Conti-Brown, a Fed Historian at the Wharton School, and author of The Power and Independence of the Federal Reserve, came on to talk about this break from precedent. He stressed why the White House commenting on the U.S. central bank's policy choices – even in just a few sentences – was more important than it seemed.

The wall between the White House and the Federal Reserve is a relatively new one. George H.W. Bush was the last President to weigh in on monetary policy — arguing "interest rates should be lower" in his 1991 State of the Union address. As Conti-Brown pointed out, that didn't work out too well for him. The Fed didn't listen, and Bush lost the 1992 election. Conti-Brown said one of the biggest consequences could be the Fed becoming the latest institution to become dogged by partisan politics.

Before being dragged into the latest news cycle, Jerome Powell had told lawmakers he wanted to "stay in his lane" of monetary policy and out of politics. Jens Nordvig, CEO and Founder of Exante Data, came on to discuss what we learned from those two days of Congressional testimony and his increased transparency as Chair. Nordvig told us why despite the flattening yield curve giving people recession jitters, he still sees plenty of stimulus coming down the pipeline.

Then we turned to President Trump's other market moving front. Terry Haines, Evercore ISI Senior Political Strategist, and Peter Tchir, Academy Securities Head of Macro Strategy, both came on to debate the U.S.'s trade war. Are markets being too complacent about tariffs or are they too glued to the headlines? Tchir warned it might take a little while to hit the data, but the trade war is real, "very serious" and would have a real economic impact. Tchir argued large companies may be able to ride out the trade storm, but small and mid-size firms that have been responsible for 70 percent growth would be hit first and have more trouble reacting.

Haines noted we cannot look at the issue of trade in a silo. It's a game of 4-D chess. Trade deals are inextricably connected to other thorny issues, he noted, including Kim Jong Un.  "As long as China maintains and keeps up the pressure on its client state North Korea to denuclearize, they have a chance of getting marginally better conditions on trade," Haines said. He also predicted enacting tariffs on imported cars under the guise of national security would be a "bridge too far" for Congress.

Then Erika Nardini, CEO of Barstool Sports, joined to talk about why the more than fifteen-year-old brand she runs is more like a two-year old business, and what changed when she came to the helm two years ago.  Nardini also discussed the challenge of finding versus maintaining an audience, and how their brand finds people where they live these days: on the internet. 

 

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