Saturday, March 14, 2020

Donald Trump on the Late Afternoon Friday Rally in the Stock Market, and What His Take Means

While President Trump held a press conference Friday afternoon in front of the White House to discuss new policy measures in response to COVID-19, the stock market rallied with the Dow Jones Industrial Average closing up 1,985 points (or 9.36%) to 23,185.62.

The President must have been proud of the gain.

He sent Fox Business anchor Lou Dobbs an autographed print out of Friday's stock market chart.

In other words, the President is very focused on the stock market and will attempt anything his advisers think of to boost the market.

I expect the Federal Reserve Board to announce another rate cut at the end of the Fed's policy committee two day meeting next week Tuesday and Wednesday.

The Fed is probably inclined to cut anyway but Trump will put pressure on Treasury Secretary Steve Mnuchin to make sure it is a big cut and Mnuchin will put pressure on his buddy Fed chairman Jay Powell, and it will be done.

I am warning subscribers to the EPJ Daily Alert to expect a very strong acceleration in price inflation on the other side of the COVID-19 panic.



  1. RW, doesn't the acceleration of price inflation partly depend on what's going on with IOER? In other words, if a lot of the new money created ends up sitting as excess reserves at the Fed earning interest for the banking system, and thus doesn't enter the broader economy, then won't that somewhat constrain price inflation? If so, then what's going on with IOER?

  2. And to follow up on the above observation. Many "Austrians" made the same observation after the crash in 08 and 09. The explosion of the Fed balance sheet post recession was supposed to create an explosion of prices and even of interest rates. Didn't happen. I will make the same observation now that I made then: An almost unprecedented amount of "money" has been destroyed by the current 20% decline in the stock market. If the Fed is able, at best, to "fill in" only a fraction of that loss, how is that "inflationary."? Further, if the new money shores up banks and other financial institutions--but does not lead to massive new lending or investments--again little price inflation. Right?

  3. Uh, Mr. President, how's my 401-K looking? Trump is stupid enough to believe he is largely responsible for the meteoric rise in the DJIA. Thanks to the FED for the house of cards they built on a bed of quick sand. And to short covering traders for the dead cat bounce.