While Trump has been slamming and badmouthing Jerome Powell before the entire world on his public Twitter account, demanding rate cuts and/or QE, the president has also been keeping periodic tabs on the Fed Chair via brief phone calls, with Powell’s calendar revealing that the two spoke for five minutes on May 20, from 4:42pm to 4:47pm. The call represents the fourth publicly disclosed conversation between the two this year, with May’s telephone call following similar conversations in April and March as well as a dinner meeting in February.
While there were no major fireworks in the market on or around May 20, when the S&P traded down from 2,880 to as low as 2,840…
… the call took place hours before Powell delivered speech at Atlanta Fed conference on financial markets, in which Powell flagged financial stability risks such as record debt, high valuations, leverage and CLO liquidity, and where Powell said the following:
Equity prices have recently reached new highs, and corporate bond and loan spreads are narrow. Both commercial and residential property prices have moved above their long-run relationship with rents, although price gains slowed substantially last year. All of these developments point to strong risk appetite—as might be expected given the strong economy. But there does not appear to be a feedback loop between borrowing and asset prices, as was the case in the run-up to the financial crisis.
One week ahead of the call, on May 14, Trump tweeted his desire for the Fed to “match” what he said China would do to offset economic hardship being caused by tariffs.
According to Bloomberg, Fed spokesman David Skidmore did not comment on what was said between the two.
The conversations came as the president has been attacking Powell for what he views as restrictive interest rates, which he argues undermines U.S. trade deliberations and dampen GDP growth. Just today Trump said that the U.S. “would be like a rocket ship” if the economy had lower interest rates.
President Trump called on the Federal Reserve to lower interest rates after touting the latest job report.
“We don’t have a Fed that knows what they’re doing. … If we had a Fed that would lower rates, you would have a rocket ship” pic.twitter.com/Fzg7Glx9v7
— CNN Politics (@CNNPolitics) July 5, 2019
The administration’s frustration at rising interest rates had grown so severe that the White House had reportedly explored the possibility of “legally demoting” the Fed chief.
Briefly addressing those criticisms, Powell said at the Fed’s most recent press conference in mid-June that he doesn’t plan on leaving the central bank anytime soon. “I think the law is clear that I have a four-year term, and I fully intend to serve it,” Powell said at a news conference in Washington.
Asked later at the event when it might be appropriate to publicly address Trump’s criticism, Powell said he doesn’t “discuss elected officials publicly or privately” according to CNBC. The Wall Street Journal first reported on the May telephone conversation between Powell and Trump.
via ZeroHedge News https://ift.tt/2XVPWhK Tyler Durden