President Trump Hammers Powell, “Fed is Often Wrong”

President Trump Hammers Powell, “Fed is Often Wrong”

$DIA $SPY $QQQ $RUTX $BA $VXX

President Trump says the US economy will be back and better than ever next year.

Thursday, President Trump hammered the Fed after Fed Chairman Powell offered a grim outlook on the US economy, saying there is a “long road” ahead.

I see the numbers also, and do MUCH better than they do,” President Trump said, without mentioning Mr.Powell by name. “We will have a very good Third Quarter, a great Fourth Quarter, and one of our best ever years in 2021,” the President said.

Recall that Wednesday, the Fed signaled it will not raise near-Zero interest rates at least through Y 2022, slashed its estimate for US GDP this year to -6.5% and raised its forecast for Y 2020 unemployment to 9.3%. The Fed is giving us Zero interest rates for 2 yrs. That is really good. You cannot get more Dovish than that. The Fed’s balance sheet is going to rise by about $10-T by year’s end.

Mr. Powell pledged Wednesday that the Fed would do whatever it takes for as long as it takes to get the jobs market back to full health, even holding out the possibility that it would cap yields on Treasury securities, a strategy it last employed during WWII and its immediate aftermath.

We will also soon have a Vaccine & Therapeutics/Cure. That’s my opinion. WATCH!” said President Trump.

We are going to actually be back higher next year than ever before,” President Trump said in his remarks at the White House on 5 June. “The only thing that can stop us is bad policy.”

Mr. Powell acknowledged that the jobs market may have bottomed. But he did not see a quick return to the super-healthy US labor market we saw at the start of this year.

There could be “well into the millions of people who do not get to go back to their old jobs” or to the industry they used to work in, he said. “It could be some years before we get back to those people finding jobs.”

White House adviser Larry Kudlow said Mr. Powell could show more optimism and he was going to have a talk with him.

On the Stock Market

The CBOE volatility index (VIX), a fear index, posted its largest 1-day point gainer since 16 March finishing +48% at 40.62.

The DJIA fell 1,861.82 pts, or 6.9%, to 25,128.17, the S&P 500 lost 188.04 points, or 5.89%, to 3,002.1 and the NAS Comp dropped 527.62 points, or 5.27%, to 9,492.73.

  • NAS Comp +5.8% YTD
  • S&P 500 -7.1% YTD
  • DJIA -12.0% YTD
  • Russell 2000 -18.7% YTD

Among the major S&P 500 sectors, energy and financials suffered the largest percentage drops, plunging by 9.5% and 8.2%, respectively.

Interest rate-sensitive banks slipped 9.6%, after the Fed indicated Key interest rates would remain near Zero through at least Y 2022.

Travel-related companies, among the hardest hit by mandated lockdowns, were sharply lower.

The S&P 1500 airlines index tumbled 13.8%, while Norwegian Cruise Line Holdings Ltd and Royal Caribbean Cruises Ltd dropped 16.5% and 14.3%, respectively.

Boeing Co (NYSE:BA)was the heaviest weight on the DJIA, shedding 16.4% after a Top supplier Spirit AeroSystems Holdings Inc announced a 21-day layoff for staff doing production and support work for Boeing’s 737 program.

Decliners outnumbered advancers on the NYSE by a 17.60-to-1 ratio, and on NAS, a 12.98-to-1 ratio favored decliners.

The S&P 500 posted 4 new 52-wk highs and no new lows, and the NAS Comp Comp recorded 19 new highs and 9 new lows.

Volume on US exchanges was 15.31-B shares, compared with the 12.83-B average over the last 20 trading days.

HeffX-LTN’s overall technical outlook for the major US stock market indexes is still Bullish in here.

Looking Ahead: Investors will receive the preliminary University of Michigan Index of Consumer Sentiment for June and Export and Import Prices for May Friday.

Have a healthy weekend, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.