In 2019, as former President Donald Trump has listened to the Federal Reserve. So now he’s calling on Chairman Jerome Powell to lower interest rates. The broader economy is in turmoil, forcing investors to look elsewhere. This week, it’s the first-quarter earnings reports from corporations like Tesla and Alphabet that have eyes glued. On Monday, Asia-Pacific markets were equally mixed. This trend is indicative of growing uncertainty amongst investors over economic stability, as well as the potential impacts of the next major policy shift.
Trump’s call for lower interest rates comes amid rising concerns about the impact of tariffs on imports, which he has championed since his presidency. In reality, these tariffs are nothing more than taxes on foreign imports that US consumers will ultimately pay. Trump claims that if Powell were any more in touch with the economy’s needs, “interest rates would be coming down, too.” This announcement further drives home Trump’s view that monetary policy should increasingly be in lockstep with his administration’s priorities for economic growth.
A new CNBC survey introduced some new nuances into the investor sentiment. It found that 55% of 1,000 likely primary voters disapprove of Trump’s action on the economy. This unusual public temperament might be relevant in determining how market actors think about the prevailing future direction of U.S. economic policy.
Moreover, debate over the potentially $40 billion Alaska LNG project has become the very national priority that Trump promised. He underscored the project’s ability to draw in billions of investment from countries like South Korea, Japan, and Taiwan. On economic development, U.S. Treasury Secretary Scott Bessent had some great news for an Anchorage Augusta joint major LNG project. He pointed out that South Korea, Japan, and Taiwan were all ready to fund the project and receive a large portion of the offtake. We hope this project has the power to change the region’s energy and economic landscape.
At the same time, China’s Ministry of Commerce has threatened to blacklist any signatories to such agreements, or other alliances aimed at harming China. The Chinese government promised retaliation on countries that entered agreements with the U.S. to isolate Beijing. The Trump administration expects to deploy the threat of punitive tariffs in a coordinated campaign of shock therapy against recalcitrant U.S. allies. This strategy intends to minimize their economic dependence on China, increasing the risk of conflict between the two global powers.
In the backdrop of all of these positive trends, the Federal Reserve has kept interest rates at historic lows. Chicago Fed President Austan Goolsbee is the latest to sound the alarm. He thinks the economic activity will look strong at first but then weaken by summer. He cautioned that activity could look deceptively high in the beginning. By summer it will likely fall as households deplete their hoarding, a worrying sign for sustainable economic recovery.
As earnings season unfolds, analysts will closely watch how major companies like Tesla and Alphabet navigate the current economic landscape. Their performance will likely provide insights into consumer behavior and overall market health as investors grapple with rising prices and potential shifts in fiscal policy.