Thus spake Jim Cramer
… Wednesday morning June 19. Previously in the “Squawk on the Street” segment he opined, “Powell is living in a conventional world,” not the World of Trump. Powell’s conventional world is a place where you try to get the near-impossible (monetary policy) right. It is a world that involves meticulously working through the reams of data that our economy churns out and, after significant expert consultation, making a policy choice that could have lasting effects on not only our economy but the world economy. In is not easy and it is hard to get right. It is not a by-the-seat-of-the-pants or “gut feel” operation.
The header on this CNBC post reads as follows: “Cramer: The stock market ‘would probably go up’ if Trump were to remove Powell as Fed chief.”
Check it out. Co-host David Faber asked Cramer why he was even talking about that possibility (the right question)? Both Cramer and co-host Carl Quintanilla fired back “because it is getting closer and closer (Quintanilla).” Cramer then went on to suggest that the president would figure out a way to rid himself of Powell and put a newby in charge who would do his bidding. Of course, in the final analysis, it would be the de facto newby, President Donald J. Trump, running US monetary policy. That possibility sends shivers down my spine. The President of the United States is not qualified, nor are his combined minions, to run US monetary policy. This is not political statement. It is a fact!
It is hard for me to believe that Cramer would consider the idea that replacing Powell would be cause for a market rally.
After a week full of speculation about the Fed cutting rates at the June meeting (maybe July) all hopes were dashed today as the Fed voted 8 to 1 for the status quo (2.25% to 2.5% on the Fed funds rate). Of course the Fed did leave the door open to future rate cuts if conditions required them (i.e. data dependent). Evidently the market, which is smarter than most, wasn’t expecting much of a change. It closed modestly up on the day. BTW, rates have dropped a lot since the president’s most recent tariff pronouncements. The UST 10-year note is trading at a 2.028%, down from 2.52% before the China trade talks broke off and down from a high last year of 3.24%.
Bottom line: If you wouldn’t leave a fox in charge of your chicken coop, why would you let a politician (or his or her surrogate) be in charge of the nation’s money supply? Unfortunately that seems to be what is being suggested here, without much in the way of blowback from the Street or media. They should be screaming ‘Bloody Murder’.
As to our opening Cramer comment– “The president is the Yankees and Powell is the Toledo Mud Hens.”–it is almost as bad (but not quite as bad) as his admonition to his flock in October of 2008 (pretty close to the bottom) that if you needed the money any time in the next five years you need to sell now.
What’s your take?
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