Trump And Powell

TOMORROW we await the FED's interest rate announcement, and just a few days ago, Donald Trump visited Jerome Powell, the chairman of the Federal Reserve, and put on his usual show. But what's really happening behind the cameras?

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THE VISIT

Donald Trump visited the FED — the first such visit by a U.S. President since 2006. And because we’re talking about Trump, nothing about it was typical. He entered the FED construction site wearing a hard hat, accompanied by Jerome Powell — also in a hard hat — in a scene that looked more like a reality TV show than a formal institutional visit. The photographers got enough material to last a lifetime, and the markets… held their breath.

Their relationship has had its ups and downs. Trump was the one who appointed Powell to lead the FED in 2017, but in recent months, he’s been heavily criticizing him. He’s given him the nickname “Too Late Powell” because he believes Powell didn’t lower interest rates fast enough, and in general, he's made some... less-than-diplomatic remarks.

Now, in their most recent meeting, Trump brought up something new — the renovation costs of the FED buildings, which according to him, exceeded $3.1 billion. Powell countered by saying that the figure includes another building constructed five years ago. Trump responded with a friendly pat on Powell’s back and the now-famous quip: “We’ll see, there’s still a long way to go.”

And all of this… happened in front of the cameras. Not behind closed doors, but publicly displayed. Just another day in the circus of American politics.

In a later post on Truth Social, Trump stated it was a “Great Honor” to visit the FED with Powell. Still, he couldn’t help but add: “It would’ve been better if the renovation had never started, but now that it has, I hope it finishes quickly.” Classic Trump.

INTEREST RATES

But the most substantial part, as always, was the interest rates. Trump has been running an informal pressure campaign for months to push for rate cuts. His argument? That lower rates could save the U.S. hundreds of billions in interest payments on public debt, which in 2024 exceeded $1.1 trillion.

Powell, on the other hand, has been more cautious. He already cut rates by 1% during the second half of 2024, but since December, he has kept them steady. The market expects a possible rate cut in September, and maybe another one before the end of the year.

INVESTMENT-WISE

The FED determines the cost of borrowing, liquidity, and indirectly the valuation of stocks — but this was just a show. Because Trump lives to put on a show, not to do serious politics.