Trump DEMANDS Rates Cut NOW—Will this Crash the Economy?

interest rates go down not just in the

United States but all over the world he

demanded that OPEC and especially Saudi

Arabia stop holding oil prices

artificially high like they've been

doing for the last two years in other

words contrary to everything the

governments around the world have been

claiming since 2021 Trump is at least

recognizing this this economy absolutely

sucks and it has been awful for a long

time and that regular consumers workers

and yes voters they have suffered

enormously for it that much is itself a

considerable change from when every

government official regardless of

partisan affiliation as long as they

held some office they would uniformly

say you were lying if you dared to point

out how bad it has been and how it is

not getting better so yes we're making

some small progress here but at least

having someone admit the truth for the

first time in basically forever so what

Trump said was that he was going to

Target oil prices and interest rates as

a way to help take some of the sting out

of this crappy economy in fact the

president linked those two items

together get oil prices down to their

actual economic value and then this

debate about a hawkish fed or an unclear

path for future rates that all changes

drastically now whether he can deliver

those things that's a separate question

and one we'll get into here starting

with this economics fetish over lower

interest rates what does Trump get right

and what does he have wrong but from

what has already been reported we have a

clearer idea on what the president is at

least thinking and on energy we've

already got lower than normal gas prices

at the wholesale level and that's with

oil persistently over $70 a barrel for

consumers who are struggling with lost

purchasing power getting gasoline to

come back down where it really should be

is at least one step one concrete step

if he can pull it off in the right

direction so what did President Trump

say at Davos well here's a summary of it

president Donald Trump said he would ask

Saudi Arabia and the other OPEC nations

to quote bring down the cost of oil and

reiterated the his threat to use tariffs

to bring manufacturing back to the us as

he addressed world leaders gathered at

Davos on Thursday Trump said he would

pressure the Crown Prince to raise its

promised Investments in America to $1

trillion and he expressed dismay that

the Saudis and other OPEC nations had

not acted sooner to help reduce oil

price in fact they've been holding oil

prices hostage for two years and more

the president predicted the cartel could

decrease inflation and therefore allow

for the reduction of interest rates by

lowering oil prices quote with oil

prices going down I'll demand that

interest rates drop immediately Trump

said and likewise they should be

dropping all over the world and then he

lit into the policies of his predecessor

which is what politicians are going to

do finishing up the result is the worst

inflation crisis in modern history

typical Hyperbole and Sky High interest

rates for our citizens and even

throughout the world food prices in the

price of almost every other thing known

to mankind went through the roof so

basically again the economy of the last

several years absolutely sucks finally

someone is willing to S to tell the

truth to speak common sense as he kept

referring to today and so the outline of

his proposals was basically relief to

regular people which we can all agree on

needs to happen so lower oil prices

therefore that leads to lower interest

rates and it also helps the government's

deficit which is an enormous problem all

its own there but targeting OPEC that's

really where all of the starts and OPEC

made a huge mistake gambling on an

economy that they were told was going to

be strong and resilient you ever hear

those words before so again it comes

back to the persistent theme OPEC is in

the camp where everyone said the economy

was just fine and so OPEC kept holding

oil prices High waiting for the economy

to be fine and in doing so actually

further harmed the economy it's the

ultimate backfire from Alek they

actually kept the economy weaker by

maintaining their oil oil supply

reductions I mean that's why oil is 7 to

begin with oil prices came down after

the big spike destroyed the economy in

the second half of 2022 I mean oil OPEC

said that they wanted crude near $100 so

starting in the second half of 2022 as

we saw recessions develop in Europe and

weakness start to develop in the United

States OPEC bet that the weakness would

be shortlived that the price illusion

was a legitimate recovery and therefore

the economy could absorb $100 per barrel

oil price so the started cutting Supply

in November of 22 way back in November

of 2022 betting that any weakness would

indeed be shortlived because the price

illusion to them and their economists

was indeed a real recovery so they were

betting on for example China's reopening

to work the recovery in Europe after

they what they were hoping was just a

short downturn and that the United

States economy would be actually strong

but they lost in every single one of

those gambles China's reopening failed

badly and everything that the Chinese

have done since then failed even worse

Europe is still looking to exit its

unofficial unofficial recession two plus

years later and as I've said in the

recent video Europe is experiencing as

the best example of a world that seems

to have forgotten how to grow in the

United States isn't immune either for

all the talk about strong and resilient

great economy I mean the reason that

Trump's in office already shows that

most people don't agree with that that

assessment to begin with but most of all

the labor market it never recovers

either and its path to recovery has

gotten worse and worse even more cloudy

and even more suspicious so what OPC was

hoping back in November 22 what they

were really betting on and gambling on

was that the inflection at that time was

not going to end up being permanent in

fact they were never never even

considering that could be a possibility

that the world just somehow forgot how

to grow well it didn't forget how to

grow and OPEC was wrong there was no

recovery in in 201 21 it was all a price

illusion and ever since then we've been

trying to deal with the consequences and

part of those consequences means weak

perpetually weak demand for crude oil

and energy and gasoline and everything

else that goes along with it once that

possibility did start to Dawn on OPEC

and especially Saudi Arabia and

especially oil minister abdalaziz they

started to think about cutting even more

production in June of 2023 the famous

lollipop speech or lollipop reference by

abdulaziz Saudi Arabia announced that

they were going to bring another million

barrels per day of production out of the

world Supply starting in July of 2023 as

abdulaziz said they're going to make oil

prices sweeter for Traders more harmful

for you and me and it was supposed to

have been temporary again the same

gamble that any weakness that China was

going to get his crap together later in

2023 that Europe was going to get itself

out of recession later in 2023 that the

United States was was not going to start

having an unemployment problem and they

they missed on every single one of those

in fact they knew that by September of

2023 just three months after announcing

the lollipop abdulaziz got on the onto

the media and onto television and said

we need to make it even sweeter so they

they extended their production cuts for

another three months to the end of

2023 well that got oil near $94 for WTI

and Brent around $100 it didn't last the

global economy continued on its

recession path that doesn't look like a

recession to most people and so that was

one reason why OPEC kept up with his

production Cuts because it didn't look

like a recession it looked like there

could be a pathway to recovery even

though the more time went on the more

production they had to keep off of the

marketplace it should have finally rung

some bells and said something something

permanently changed all the way back in

2022 and so what that would have meant

is that oil prices would have gone down

for economic reasons weak demand and

therefore it would have actually helped

rebalance the entire Global situation in

the global economy not saying that would

have recreated the conditions for an

actual recovery but it would have helped

take some of the sting out of how bad

the economy has been over the last

couple years for consumers they wouldn't

have had to feel the same high pric

pinch from paying at the pump as they

actually did at the same time that they

were feding lost purchasing power which

oil was a big part of that to begin with

as well as more and more fearing about

jobs incomes and hours and all the stuff

that's going wrong in the labor market

so that's why despite all of their

promises and all of their predictions

and all of their optimistic forecast

including the middle of last year when

OPEC finally said okay maybe this will

be our year the global economy will F

finally start to mend and move forward

so they're going to restore some of that

Productions in the second half of last

year only to be forced yet again and

time and again to push it further and

further into the future not for economic

reasons but for the opposite of economic

reasons the economy real economy Small E

economics demands that oil prices go

down that's why we see gasoline at least

at the wholesale level at the CME it's

unusually cheap for this time of year as

I pointed out before rbob the wholesale

Benchmark for gasoline is incredibly

cheap for this time it should be rising

and it is rising a little bit but it

should be rising a whole lot more

because that's what it does in the

winter time every winter you see

gasoline prices go up as there's a

seasonal effect in switching over

formulations and inventories and things

like that but gasoline prices should be

going a lot higher in fact in previous

years in Jan in the middle of January at

this time last year for example gasoline

last January was around 220 225 per

gallon at wholesale today it's 206 a

couple years ago in the January 2023

gasoline was up 250 260 that would have

have been normal that's what that's what

usual this time of year so even gasoline

prices that are already low at the

wholesale level are expressing real

economics here that Trump was pointing

to in what he's attempting to do here so

opec's bet that the economy was going to

strengthen therefore higher oil prices

from 2022 on forward wouldn't have been

a painful hindrance they really bought

into the price illusion of recovery and

then doubled and tripled down on it

being wrong the entire time and so what

Trump is basically saying and he's

correct in saying is that oil prices are

being held higher for non-economic

reasons and it's just simply adding more

unnecessary pain to basically the Maj

the vast majority of the entire global

economy so it's pretty clear what he's

thinking some common sense here get OPEC

and Saudi Arabia to deliver oil output

that they can gasoline prices go down

because oil prices go below $70 Maybe

below $60 $50 $40 whatever the real

economics of the situation call for and

that gives Americans Europeans Chinese

and everyone in between immediate relief

at the pump and that's a good thing

that's a positive thing the economics of

situation demand lower oil prices

because the economy is crappy and that

would actually help out a whole lot of

people and where Trump's thinking in

sort of the second step of this process

is that with oil prices going down and

not likely to spike like they have over

the last couple years these large oil

price spikes that only add even more

destructive Tendencies to the economy

eliminate those and then the Federal

Reserve which continues to express its

discon is that if that's a term its lack

of confidence over consumer prices what

they call inflation remove the oil price

spike potential therefore J Powell and

the fomc become more confident on

consumer prices and what they call

inflation so they can cut rates at a

fast rate than they're doing right now

and therefore deliver another round of

Aid to Consumers and Americans and

people around the rest of the world

because like he said this this would

apply to everyone else just as

much and as the Federal Reserve is able

to cut rates faster because policy

makers become more confident on what

they call inflation that might also mean

lower long-term rates as well so not

only does that help out consumers in

another way it also and this is what

Trump's thinking it would also help the

federal budget now no doubt his advisers

had pointed out that the easiest way to

get control over the deficit the easiest

and most immediate way is to have

interest rates go down which would mean

lower borrowing costs which right now

are is insanely enormous so get the

deficit down Not only would that reduce

the interest expense it also might

create some fiscal space for his own

spending priorities too he could

actually kill two birds with one stone

so lower oil price prices lower fed

rates lower Market rates lower deficit

happier consumers that's what he's

thinking that's what he's going for here

but first of all can he deliver and on

the interest rate side is that actually

how it works and the answer is sadly no

from the fomc's perspective just as a

start they have other considerations

Beyond oil prices so to to convince the

Federal Reserve and its officials that

they need to be more aggressive in great

it's going to take more than lower oil

prices it might work it might convince

some of the hawkish is fence sitters

that they can move over to the doish

side but like I said they have other

considerations primarily expectations as

well as their wrong-headed view of the

Phillips curve so right away they're

going to encounter resistance at the FED

level but even the issue of interest

rates themselves the FED doesn't control

them I mean if the last few years

haven't shown that and nothing will the

historically inverted curve was the

market for fighting the fed the entire

time and for the same reason that kept

OPEC trying to keep oil prices up the

fundamentals in the real economy the

crappy fundamentals argue for lower

rates over time anyway that has not

changed I keep pointing this out we make

our foreign comparisons to Canada or

Germany swap spreads and a number of

other indications that suggest the

market is preparing for rates to go down

over time so maybe you can argue there's

some benefit in Trump getting rates to

go lower faster but the market is

already considering that anyway longer

term rates are going down and that's not

a good

thing lower rates don't stimulate I mean

we pull out all of the charts showing

the FED cutting rates into the beginning

of every recession and not actually

stopping the recession or starting a

recovery in all of those situations so

lower rates don't stimulate anyway and

if the economy does really boom it

really does achieve success rates are

going to go up on their own not because

of the FED rates go up when things are

going well but that's a good thing too

because the deficit would then come down

via higher relative tax collections more

incomes more jobs more taxes so a

legitimate recovery would mean more

taxes and we don't need to cut borrowing

costs because with a little bit of

fiscal sanity you the two things

normalize taxes go up spending stays

hopefully relatively sane and the

deficit comes down for economic reasons

not those of central planning so from a

macro perspective perspective Trump's

right about oil prices they've been

artificially Held High by non-economic

reasons and some political reasons

probably too but from a macro

perspective he's right on oil but he's

wrong on interest rates but we have to

realize here one final note Trump's

perspective is not macroeconomic it's

political as far as the market reaction

goes oil prices did come down pretty

substantially after news of the speech

and what he what Trump said was released

to the public but w has already been

moving lower anyway after last week's

mini surge as far as interest rates

there hasn't been much reaction at all

because of all the reasons I just cited

fundamentally rates want to go down

anyway so Trump trying to cajo the

Federal Reserve into clearing up the

path of short-term interest rates

doesn't necessarily change all that much

as far as longer term interest rates are

concerned but like I said Trump's goal

here is not necessarily macroeconomic

he's creating what he thinks is a

political environment that will help out

his cause now the one sense as far as

oil prices are concerned he's absolutely

right one way to deliver some real

legitimate economic relief to a baguer

consumer and business base would be to

get oil prices to come down and the

easiest way to do that is to say to

Saudi Arabia put the oil back into the

marketplace which they could do tomorrow

and if they did oil prices would go down

how far that's the question we don't

have an answer to but as cheap as

wholesale gasoline is in the US today

because of how weak demand is it would

get even cheaper and that would be a

tremendous benefit let's not dismiss

that part of it as far as interest rates

go and the rest of it it's not really up

to the Federal Reserve the Trump has

always had this issue with the FED to

begin with going back to 2018 and 2019

he complained about interest rates back

then but that's not even even really the

issue here the issue here is we want

interest rates to go up and when

interest rates go up that means that

economic success legitimate SU

sustainable economic success is at our

fingertips so interest rates going up

would be a huge positive we wouldn't

have to worry about interest on the

deficit because tax collections would be

going up for their own economic reasons

too so rates going higher is what we're

actually after not short-term rates not

the federal I'm talking about interest

rates on bonds and yields there because

that would Express fundamental agreement

with growth and inflation expectations

with an emphasis on the growth part not

so much the inflation the reason why

interest rates want to go down to begin

with is because there's so much bigger

work that needs to be done to fix this

overall economy the global economy and

Trump is working on those he's talking

about investments from Saudi Arabia and

others reshoring manufacturing but

that's where the markets are are

skeptical the bigger picture long run is

much more uncertain and still leaning

decidedly negative but the positive here

for the first time in a long time we

have someone in official capacity and

animportant someone who isn't just

blowing smoke up everyone's ass telling

us how great things are he's finally

willing to tell the truth to say the

economy sucks it's poor and it's getting

poor for a world that's forgot how to

grow it may just be a small positive but

it's the first one in a very long

time the FED may think they are but oil

price spikes are not inflationary they

do what Trump is complaining about they

d destroy the economy

interest rates go down not just in the

United States but all over the world he

demanded that OPEC and especially Saudi

Arabia stop holding oil prices

artificially high like they've been

doing for the last two years in other

words contrary to everything the

governments around the world have been

claiming since 2021 Trump is at least

recognizing this this economy absolutely

sucks and it has been awful for a long

time and that regular consumers workers

and yes voters they have suffered

enormously for it that much is itself a

considerable change from when every

government official regardless of

partisan affiliation as long as they

held some office they would uniformly

say you were lying if you dared to point

out how bad it has been and how it is

not getting better so yes we're making

some small progress here but at least

having someone admit the truth for the

first time in basically forever so what

Trump said was that he was going to

Target oil prices and interest rates as

a way to help take some of the sting out

of this crappy economy in fact the

president linked those two items

together get oil prices down to their

actual economic value and then this

debate about a hawkish fed or an unclear

path for future rates that all changes

drastically now whether he can deliver

those things that's a separate question

and one we'll get into here starting

with this economics fetish over lower

interest rates what does Trump get right

and what does he have wrong but from

what has already been reported we have a

clearer idea on what the president is at

least thinking and on energy we've

already got lower than normal gas prices

at the wholesale level and that's with

oil persistently over $70 a barrel for

consumers who are struggling with lost

purchasing power getting gasoline to

come back down where it really should be

is at least one step one concrete step

if he can pull it off in the right

direction so what did President Trump

say at Davos well here's a summary of it

president Donald Trump said he would ask

Saudi Arabia and the other OPEC nations

to quote bring down the cost of oil and

reiterated the his threat to use tariffs

to bring manufacturing back to the us as

he addressed world leaders gathered at

Davos on Thursday Trump said he would

pressure the Crown Prince to raise its

promised Investments in America to $1

trillion and he expressed dismay that

the Saudis and other OPEC nations had

not acted sooner to help reduce oil

price in fact they've been holding oil

prices hostage for two years and more

the president predicted the cartel could

decrease inflation and therefore allow

for the reduction of interest rates by

lowering oil prices quote with oil

prices going down I'll demand that

interest rates drop immediately Trump

said and likewise they should be

dropping all over the world and then he

lit into the policies of his predecessor

which is what politicians are going to

do finishing up the result is the worst

inflation crisis in modern history

typical Hyperbole and Sky High interest

rates for our citizens and even

throughout the world food prices in the

price of almost every other thing known

to mankind went through the roof so

basically again the economy of the last

several years absolutely sucks finally

someone is willing to S to tell the

truth to speak common sense as he kept

referring to today and so the outline of

his proposals was basically relief to

regular people which we can all agree on

needs to happen so lower oil prices

therefore that leads to lower interest

rates and it also helps the government's

deficit which is an enormous problem all

its own there but targeting OPEC that's

really where all of the starts and OPEC

made a huge mistake gambling on an

economy that they were told was going to

be strong and resilient you ever hear

those words before so again it comes

back to the persistent theme OPEC is in

the camp where everyone said the economy

was just fine and so OPEC kept holding

oil prices High waiting for the economy

to be fine and in doing so actually

further harmed the economy it's the

ultimate backfire from Alek they

actually kept the economy weaker by

maintaining their oil oil supply

reductions I mean that's why oil is 7 to

begin with oil prices came down after

the big spike destroyed the economy in

the second half of 2022 I mean oil OPEC

said that they wanted crude near $100 so

starting in the second half of 2022 as

we saw recessions develop in Europe and

weakness start to develop in the United

States OPEC bet that the weakness would

be shortlived that the price illusion

was a legitimate recovery and therefore

the economy could absorb $100 per barrel

oil price so the started cutting Supply

in November of 22 way back in November

of 2022 betting that any weakness would

indeed be shortl ived because the price

illusion to them and their economists

was indeed a real recovery so they were

betting on for example China's reopening

to work the recovery in Europe after

they what they were hoping was just a

short downturn and that the United

States economy would be actually strong

but they lost in every single one of

those gambles China's reopening failed

badly and everything that the Chinese

have done since then failed even worse

Europe is still looking to exit its

unofficial unofficial recession two plus

years later and as I've said in the

recent video Europe is experiencing as

the best example of a world that seems

to have forgotten how to grow in the

United States isn't immune either for

all the talk about strong and resilient

great economy I mean the reason that

Trump's in office already shows that

most people don't agree with that that

assessment to begin with but most of all

the labor market it never recovers

either and its path to recovery has

gotten worse and worse even more cloudy

and even more suspicious so what OPC was

hoping back in November 22 what they

were really betting on and gambling on

was that the inflection at that time was

not going to end up being permanent in

fact they were never never even

considering that could be a possibility

that the world just somehow forgot how

to grow well it didn't forget how to

grow and OPEC was wrong there was no

recovery in in 201 21 it was all a price

illusion and ever since then we've been

trying to deal with the consequences and

part of those consequences means weak

perpetually weak demand for crude oil

and energy and gasoline and everything

else that goes along with it once that

possibility did start to Dawn on OPEC

and especially Saudi Arabia and

especially oil minister abdalaziz they

started to think about cutting even more

production in June of 2023 the famous

lollipop speech or lollipop reference by

abdulaziz Saudi Arabia announced that

they were going to bring another million

barrels per day of production out of the

world Supply starting in July of 2023 as

abdulaziz said they're going to make oil

prices sweeter for Traders more harmful

for you and me and it was supposed to

have been temporary again the same

gamble that any weakness that China was

going to get his crap together later in

2023 that Europe was going to get itself

out of recession later in 2023 that the

United States was was not going to start

having an unemployment problem and they

they missed on every single one of those

in fact they knew that by September of

2023 just three months after announcing

the lollipop abdulaziz got on the onto

the media and onto television and said

we need to make it even sweeter so they

they extended their production cuts for

another three months to the end of

2023 well that got oil near $94 for WTI

and Brent around $100 it didn't last the

global economy continued on its

recession path that doesn't look like a

recession to most people and so that was

one reason why OPEC kept up with his

production Cuts because it didn't look

like a recession it looked like there

could be a pathway to recovery even

though the more time went on the more

production they had to keep off of the

marketplace it should have finally rung

some bells and said something something

permanently changed all the way back in

2022 and so what that would have meant

is that oil prices would have gone down

for economic reasons weak demand and

therefore it would have actually helped

rebalance the entire Global situation in

the global economy not saying that would

have recreated the conditions for an

actual recovery but it would have helped

take some of the sting out of how bad

the economy has been over the last

couple years for consumers they wouldn't

have had to feel the same high pric

pinch from paying at the pump as they

actually did at the same time that they

were feding lost purchasing power which

oil was a big part of that to begin with

as well as more and more fearing about

jobs incomes and hours and all the stuff

that's going wrong in the labor market

so that's why despite all of their

promises and all of their predictions

and all of their optimistic forecast

including the middle of last year when

OPEC finally said okay maybe this will

be our year the global economy will F

finally start to mend and move forward

so they're going to restore some of that

Productions in the second half of last

year only to be forced yet again and

time and again to push it further and

further into the future not for economic

reasons but for the opposite of economic

reasons the economy real economy Small E

economics demands that oil prices go

down that's why we see gasoline at least

at the wholesale level at the CME it's

unusually cheap for this time of year as

I pointed out before rbob the wholesale

Benchmark for gasoline is incredibly

cheap for this time it should be rising

and it is rising a little bit but it

should be rising a whole lot more

because that's what it does in the

winter time every winter you see

gasoline prices go up as there's a

seasonal effect in switching over

formulations and inventories and things

like that but gasoline prices should be

going a lot higher in fact in previous

years in Jan in the middle of January at

this time last year for example gasoline

last January was around 220 225 per

gallon at wholesale today it's 206 a

couple years ago in the January 2023

gasoline was up 250 260 that would have

have been normal that's what that's what

usual this time of year so even gasoline

prices that are already low at the

wholesale level are expressing real

economics here that Trump was pointing

to in what he's attempting to do here so

opec's bet that the economy was going to

strengthen therefore higher oil prices

from 2022 on forward wouldn't have been

a painful hindrance they really bought

into the price illusion of recovery and

then doubled and tripled down on it

being wrong the entire time and so what

Trump is basically saying and he's

correct in saying is that oil prices are

being held higher for non-economic

reasons and it's just simply adding more

unnecessary pain to basically the Maj

the vast majority of the entire global

economy so it's pretty clear what he's

thinking some common sense here get OPEC

and Saudi Arabia to deliver oil output

that they can gasoline prices go down

because oil prices go below $70 Maybe

below $60 $50 $40 whatever the real

economics of the situation call for and

that gives Americans Europeans Chinese

and everyone in between immediate relief

at the pump and that's a good thing

that's a positive thing the economics of

situation demand lower oil prices

because the economy is crappy and that

would actually help out a whole lot of

people and where Trump's thinking in

sort of the second step of this process

is that with oil prices going down and

not likely to spike like they have over

the last couple years these large oil

price spikes that only add even more

destructive Tendencies to the economy

eliminate those and then the Federal

Reserve which continues to express its

discon is that if that's a term its lack

of confidence over consumer prices what

they call inflation remove the oil price

spike potential therefore J Powell and

the fomc become more confident on

consumer prices and what they call

inflation so they can cut rates at a

fast rate than they're doing right now

and therefore deliver another round of

Aid to Consumers and Americans and

people around the rest of the world

because like he said this this would

apply to everyone else just as

much and as the Federal Reserve is able

to cut rates faster because policy

makers become more confident on what

they call inflation that might also mean

lower long-term rates as well so not

only does that help out consumers in

another way it also and this is what

Trump's thinking it would also help the

federal budget now no doubt his advisers

had pointed out that the easiest way to

get control over the deficit the easiest

and most immediate way is to have

interest rates go down which would mean

lower borrowing costs which right now

are is insanely enormous so get the

deficit down Not only would that reduce

the interest expense it also might

create some fiscal space for his own

spending priorities too he could

actually kill two birds with one stone

so lower oil price prices lower fed

rates lower Market rates lower deficit

happier consumers that's what he's

thinking that's what he's going for here

but first of all can he deliver and on

the interest rate side is that actually

how it works and the answer is sadly no

from the fomc's perspective just as a

start they have other considerations

Beyond oil prices so to to convince the

Federal Reserve and its officials that

they need to be more aggressive in great

it's going to take more than lower oil

prices it might work it might convince

some of the hawkish is fence sitters

that they can move over to the doish

side but like I said they have other

considerations primarily expectations as

well as their wrong-headed view of the

Phillips curve so right away they're

going to encounter resistance at the FED

level but even the issue of interest

rates themselves the FED doesn't control

them I mean if the last few years

haven't shown that and nothing will the

historically inverted curve was the

market for fighting the fed the entire

time and for the same reason that kept

OPEC trying to keep oil prices up the

fundamentals in the real economy the

crappy fundamentals argue for lower

rates over time anyway that has not

changed I keep pointing this out we make

our foreign comparisons to Canada or

Germany swap spreads and a number of

other indications that suggest the

market is preparing for rates to go down

over time so maybe you can argue there's

some benefit in Trump getting rates to

go lower faster but the market is

already considering that anyway longer

term rates are going down and that's not

a good

thing lower rates don't stimulate I mean

we pull out all of the charts showing

the FED cutting rates into the beginning

of every recession and not actually

stopping the recession or starting a

recovery in all of those situations so

lower rates don't stimulate anyway and

if the economy does really boom it

really does achieve success rates are

going to go up on their own not because

of the FED rates go up when things are

going well but that's a good thing too

because the deficit would then come down

via higher relative tax collections more

incomes more jobs more taxes so a

legitimate recovery would mean more

taxes and we don't need to cut borrowing

costs because with a little bit of

fiscal sanity you the two things

normalize taxes go up spending stays

hopefully relatively sane and the

deficit comes down for economic reasons

not those of central planning so from a

macro perspective perspective Trump's

right about oil prices they've been

artificially Held High by non-economic

reasons and some political reasons

probably too but from a macro

perspective he's right on oil but he's

wrong on interest rates but we have to

realize here one final note Trump's

perspective is not macroeconomic it's

political as far as the market reaction

goes oil prices did come down pretty

substantially after news of the speech

and what he what Trump said was released

to the public but w has already been

moving lower anyway after last week's

mini surge as far as interest rates

there hasn't been much reaction at all

because of all the reasons I just cited

fundamentally rates want to go down

anyway so Trump trying to cajo the

Federal Reserve into clearing up the

path of short-term interest rates

doesn't necessarily change all that much

as far as longer term interest rates are

concerned but like I said Trump's goal

here is not necessarily macroeconomic

he's creating what he thinks is a

political environment that will help out

his cause now the one sense as far as

oil prices are concerned he's absolutely

right one way to deliver some real

legitimate economic relief to a baguer

consumer and business base would be to

get oil prices to come down and the

easiest way to do that is to say to

Saudi Arabia put the oil back into the

marketplace which they could do tomorrow

and if they did oil prices would go down

how far that's the question we don't

have an answer to but as cheap as

wholesale gasoline is in the US today

because of how weak demand is it would

get even cheaper and that would be a

tremendous benefit let's not dismiss

that part of it as far as interest rates

go and the rest of it it's not really up

to the Federal Reserve the Trump has

always had this issue with the FED to

begin with going back to 2018 and 2019

he complained about interest rates back

then but that's not even even really the

issue here the issue here is we want

interest rates to go up and when

interest rates go up that means that

economic success legitimate SU

sustainable economic success is at our

fingertips so interest rates going up

would be a huge positive we wouldn't

have to worry about interest on the

deficit because tax collections would be

going up for their own economic reasons

too so rates going higher is what we're

actually after not short-term rates not

the federal I'm talking about interest

rates on bonds and yields there because

that would Express fundamental agreement

with growth and inflation expectations

with an emphasis on the growth part not

so much the inflation the reason why

interest rates want to go down to begin

with is because there's so much bigger

work that needs to be done to fix this

overall economy the global economy and

Trump is working on those he's talking

about investments from Saudi Arabia and

others reshoring manufacturing but

that's where the markets are are

skeptical the bigger picture long run is

much more uncertain and still leaning

decidedly negative but the positive here

for the first time in a long time we

have someone in official capacity and

an important someone who isn't just

blowing smoke up everyone's ass telling

us how great things are he's finally

willing to tell the truth to say the

economy sucks it's poor and it's getting

poor for a world that's forgot how to

grow it may just be a small positive but

it's the first one in a very long

time the FED may think they are but oil

price spikes are not inflationary they

do what Trump is complaining about they

d destroy the economy