Latest / Best of Business / Sam Dickie: Fisher Funds expert on Donald Trump's attacks on Federal Reserve Chair Jerome Powell

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Sam Dickie: Fisher Funds expert on Donald Trump's attacks on Federal Reserve Chair Jerome Powell · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks B Follow
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  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Donald Trump has this week been attacking the Chair of
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  Speaker 2: the Federal Reserve, Jerome Powell. Earlier this week he said
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  Speaker 2: that Powell's termination cannot come soon enough. Think you may
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  Speaker 2: have called him a major loser at some stage. Then
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  Speaker 2: he later said he had no intention of file firing
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  Speaker 2: pal And now he's gone on to attack Powell once
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  Speaker 2: again for keeping the interest rates too high. Now, Sam
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  Speaker 2: Dicky from Fisher Funds has been watching all of this
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  Speaker 2: play out and he's with us.
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  Speaker 3: Hello, Sam, good eating here.
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  Speaker 2: This stuff is silly from Trump, right, because having a
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  Speaker 2: central bank that is independent is crucial, but particularly in
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  Speaker 2: the US.
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  Speaker 1: That's right, it is critical.
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  Speaker 3: So the US Federal Reserve has two primary jobs, maximum
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  Speaker 3: employment within reason, so without causing the economy to overheat.
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  Speaker 3: And the second one is stable prices, so keeping inflation
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  Speaker 3: around two percent. And politicians incentives may run with that,
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  Speaker 3: but mostly they'll often run counter that, and things like
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  Speaker 3: being popular is more to them. So central bank is
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  Speaker 3: like Powe. He remembers the nineteen seventies. He remembers when
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  Speaker 3: President Nixon pressured the feed, they caved and cut interest
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  Speaker 3: rates early, and this was the primary cause of the
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  Speaker 3: stagflation crisis, where grow slowed and inflation shot through the roof.
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  Speaker 2: So what's Trump playing at? Why is he doing this?
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  Speaker 3: Excellent question. I think it's just a pressure cocko tactic,
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  Speaker 3: And it's not like he's the first politician globally to
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  Speaker 3: try and pressure independent central banks and sort of democracies.
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  Speaker 3: But he wants rate cuts now to boost the economy
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  Speaker 3: because he's aware that US growth is going to be
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  Speaker 3: dragged lower due to his own Liberation Day tariffs. He
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  Speaker 3: conveniently forgot to mention that and the uncertainty of liberation
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  Speaker 3: they will cause businesses and consumers to sit on their
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  Speaker 3: hands and not spin. Then as a result, like you said,
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  Speaker 3: he called power major loser, But he is conveniently ignoring
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  Speaker 3: the inflation and the impact of his own Liberation Day tariffs.
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  Speaker 2: So I mean, it's possible that what he's trying to
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  Speaker 2: do is put pressure on Powell to do something. But
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  Speaker 2: it's also possible that he is setting up, at least
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  Speaker 2: in the public imagination, somebody else like a scapegoat for
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  Speaker 2: what's going to happen next.
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  Speaker 3: A blame game exactly. He's no stranger to playing those.
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  Speaker 3: It's also like sort of yelling at a referee to
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  Speaker 3: sway the game. You know it's wrong, it might work,
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  Speaker 3: most often it doesn't, and at best you get frowned
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  Speaker 3: upon by the other mums and dads.
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  Speaker 2: Okay, so what does this mean for investors?
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  Speaker 3: We found his pain threshold again here that we discussed
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  Speaker 3: last week. So it wasn't equity markets. It was the
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  Speaker 3: thirty year bond yields. And remember thirty year bond yields
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  Speaker 3: reflects several things, long term growth, long term inflation, and
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  Speaker 3: the risk premium on the US government as a borrower.
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  Speaker 3: And they spiked higher again as just the width of
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  Speaker 3: the US feed losing its independence and therefore credibility, caused
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  Speaker 3: those investors to put a higher risk premium on there.
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  Speaker 3: And remember this hurts main streets. Ninety percent of mortgages
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  Speaker 3: in the US has set off those rates. So he
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  Speaker 3: blinked and said, I never had the intention of firing
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  Speaker 3: feed chair Powe. I want him to be earlier, more
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  Speaker 3: active on lowering rates and not late. But it's not
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  Speaker 3: the end of the world if he doesn't cut rates.
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  Speaker 3: So a complete backflip.
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  Speaker 2: Yeah, it's such a weird time. Sam, thank you so much.
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  Speaker 2: As always, enjoy your long weekend. That's Sam Dicky Offisher
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  Speaker 2: Funds
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