Trump needs the Fed to act or its curtains for his economy. And his one shot at re-election.
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Still, if the GDP revisions for the fourth quarter of 2018 are accurate, and growth fell to 1.1% year-on-year, then it is a no-brainer to say the economy is slowing more than expected. Nonfarm payrolls may even surprise to the downside in the coming months, something that actually can be linked to the trade war. Without any macro shifts, one must assume a recession is in sight.
Zero rates puts the U.S. on par with Europe, where the European Central Bank's overnight lending rate has been at zero for three years. And where smarty-pants financial pundits are actually trying to convince savers that negative interest rates, and paying banks for allowing you to park money in a savings account, is somehow a good thing.
Trump said he would tack 10% tariffs on $300 billion worth of Chinese imports on Sept. 1. The tariff means all China goods shipped to the U.S. are now forced to pay higher port fees. "Global government bonds that have negative yields now stand at a record $15 trillion and act as a gravitational black hole that drags positive yielding bonds lower," says Neil MacKinnon, an economist for VTB Capital in London.
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