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Speaker 1: Donald Trump has this week been attacking the chair of

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Speaker 1: the Federal Reserve, Jerome Powell. Earlier this week he said

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Speaker 1: that Powell's termination cannot come soon enough. I think he

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Speaker 1: may have called him a major loser at some stage.

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Speaker 1: Then he later said he had no intention of firing Pale,

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Speaker 1: and now he's gone on to attack Powell once again

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Speaker 1: for keeping the interest rates too high. Now, Sam Dicky

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Speaker 1: from Fisher Funds has been watching all of this play

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Speaker 1: out and he's with us.

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Speaker 2: Hello, Sam, Good evening, Heather.

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Speaker 1: This stuff is silly from Trump, right, because having a

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Speaker 1: central bank that is independent is crucial, but particularly in

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Speaker 1: the US.

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Speaker 2: That's right, it is critical. So the US Federal Reserve

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Speaker 2: has two primary jobs, maximum employment within reason, so without

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Speaker 2: causing the economy to overheat. And the second one is

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Speaker 2: stable prices, so keeping inflation around two percent. And politicians

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Speaker 2: incentives may run with that, but mostly they'll often run

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Speaker 2: counter to that, and things like being popular is more

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Speaker 2: important to them. So central bank is like Powe. He

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Speaker 2: remembers the nineteen seventies. He remembers when President Nixon pressured

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Speaker 2: the feed, they caved and cut interest rates early, and

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Speaker 2: this was the primary cause of the stagflation crisis where

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Speaker 2: grow slowed and inflation shot through the roof.

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Speaker 1: So what's Trump playing at? Why is he doing this?

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Speaker 2: Excellent question. I think it's just a pressure cocko tactic.

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Speaker 2: And it's not like he's the first politician globally to

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Speaker 2: try and pressure independent central banks and sort of democracies.

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Speaker 2: But he wants rate cuts now to boost the economy

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Speaker 2: because he's aware that US growth is going to be

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Speaker 2: dragged lower due to his own Liberation Day tariffs. He

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Speaker 2: conveniently forgot to mention that and the uncertainty of liberation

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Speaker 2: they will cause businesses and consumers to sit on their

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Speaker 2: hands and not spin. Then as a result, like you said,

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Speaker 2: he called power major loser, But he is conveniently ignoring

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Speaker 2: the inflation and the impact of his own Liberation Day tariffs.

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Speaker 1: So I mean, it's possible that what he's trying to

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Speaker 1: do is put pressure on Powell to do something. But

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Speaker 1: it's also possible that he is setting up, at least

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Speaker 1: in the public imagination, somebody else scapegoat for what's going

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Speaker 1: to happen next.

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Speaker 2: A blame game exactly. He's no stranger to playing those.

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Speaker 2: It's also like sort of yelling at a referee to

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Speaker 2: sway the game. You know it's wrong. It might work,

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Speaker 2: most often it doesn't, and the best you get frowned

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Speaker 2: upon by the other mums and dads.

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Speaker 1: Okay, so what does this mean for investors?

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Speaker 2: We found his pain threshold again here that we discussed

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Speaker 2: last week. So it wasn't equity markets. It was the

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Speaker 2: thirty year bond yields. And remember thirty year bond yields

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Speaker 2: reflects several things, long term growth, long term inflation, and

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Speaker 2: the risk premium on the US government as a borrower,

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Speaker 2: and they spiked higher again as just the width of

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Speaker 2: the US FED losing its independence and therefore credibility caused

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Speaker 2: those investors to put a higher risk premium on there.

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Speaker 2: And remember this hurts main street, so ninety percent of

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Speaker 2: mortgages in the US has set off those rates. So

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Speaker 2: he blinked and said, I never had the intention of

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Speaker 2: firing feed chair power. I want him to be earlier,

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Speaker 2: more active on lowering rates and not late. But it's

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Speaker 2: not the end of the world if he doesn't cut rates.

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Speaker 2: So a complete backflip.

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Speaker 1: Yeah, it's such a weird time, Sam. Thank you so much,

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Speaker 1: as always, enjoy your long weekend. That's Sam Dickey of

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Speaker 1: Fisher Funds.

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