The President was on Twitter over the past few days talking up the economy and the performance of key markets under his administration.
Here’s what he said…
If you were entering as president, in a slow growing and vulnerable economy, and you could have your wish, you would probably want stocks to move higher (to boost confidence and paper wealth), rates to move lower (to keep housing recovery going and promote borrowing and consumption), gas prices to move lower (to put extra money into the pockets of consumers), commodities prices to move lower (to make things cheaper) and the dollar to move lower (to stimulate demand from foreign buyers of our stuff).
That’s exactly what the Trump got. For the first six months of the year (and five-plus months of his presidency): stocks went up 8%, oil went down 14%, rates fell by 13 basis points (on the ten-year), the dollar fell by 6% and broad commodities prices fell by 9%.
If you asked Trump back in January if he would take that, he’d probably tell you that’s a dream scenario. If you asked a hedge fund manager if he would position for that outcome, he’d tell you it couldn’t happen. The inter-relationship of it all just couldn’t happen. But it did.
Is it, in part, Trump influence? Maybe. Maybe more explicit than just influence. When you hire one of the most powerful and connected U.S. oil guys to run the State Department, and you tell him you want gas prices to remain cheap (but don’t kill our shale industry in the process), the result we’ve gotten over the past six months might be the most perfectly managed oil price to fit that demand.
What about rates, stocks and the dollar? As a former Goldman guy, hedge funder and subprime mortgage vulture investor, our new U.S. Treasury Secretary knows markets very well. For Treasury bonds/notes to continue to do well in a world where the Fed is tightening the benchmark interest rate, someone has to keep buying Treasurys to keep mortgage rates low. Perhaps encouragement by the Treasury to foreign governments and central banks to keep buying? Maybe. Somehow they’ve manufactured a weaker dollar in the process.
Readers: I’m including an invitation to join me in my premium advisory service, the Forbes Billionaire’s Portfolio, where I’ve designed a portfolio of the best stocks, owned by the best billionaire investors. Take advantage of our extended July 4th risk–free offer to join us, just click here. If you join now, you can get on board with a stock in our portfolio that’s positioned to be involved in the most lucrative merger of the year.