President Donald Trump materializes to be willing to use the U.S.-China trade war to try to force Federal Reserve Chairman Jerome Powell to cut interest rates again, CNBC’s Jim Cramer answered Thursday.
Even with the election coming up next year, Trump is indicating that he’s prepared to risk a decline and “it’s Powell’s job to keep us out,” Cramer said on “Squawk on the Street.” “The president is saying, ‘We’ll take it, we can handle it.'”
The “Mad Money” army was analyzing Trump’s comments Wednesday, when the president told reporters that he was “the Chosen One” to take on China.
Trump has been blaming the Fed for engage in back the economy not his tariffs. “The president is not backing down,” said Cramer.
A White House spokesperson was not this instant available to respond to Cramer’s comments.
Concerns about the U.S. economy are mounting as Washington gets ready to impose imposts, effective Sept. 1, on nearly all of China’s imports not already subject to duties. While the planned tariffs on some of the companies coming in from China were delayed until mid-December and others were canceled, the list remains big. On Thursday, Beijing said any more U.S. tariffs would lead to escalation.
At the same time, the Fed will consider whether to slenderize the cost of borrowing money at its September meeting — two months after cutting rates for the first time in more than a decade. The demand expects, with near certainty, that the central bank will cut rates again next month — a disturb Trump has repeatedly said is necessary.
In a sign that Wall Street is worried about whether the Fed can prevent a dip, the 10-year Treasury yield briefly inverted and went below the 2-year yield last week for the first experience since before the 2008 financial crisis. It happened again Wednesday and Thursday. Such an inversion has preceded every decline over the past 50 years. However, on average, it takes up to two years for a recession to materialize.