ENOUGH BUT WE WILL WIN ANYWAY. JOINING ME NOW, HOST AND
BUSINESS CORRESPONDENT,
BUSINESS CORRESPONDENT, STEPHANIE RUHLE AND HOST OF THE
POLITICAL PODCAST, BEN WHITE.
CNBC IS REPORTING THAT THERE’S A
CUT IN RATES BY A QUARTER POINT.
HOW UNUSUAL IS THIS MOVE IN SUCH
A STRONG ECONOMY?
>> LET’S SEPARATE IT INTO 25
BASIS POINTS IS NOT THAT BIG OF
A DEAL.
A DEAL. IT IS CURVING THINGS.
THE PRESIDENT SAYING HE WANTED A
BIG RATE CUT.
IF WE GOT 50 BASIS POINTS OUT OF
J POWELL, THAT WOULD RAISE
EYEBROWS FROM THOSE WHO SAY,
HOLD A SECOND.
IS THIS GUY FALLING TO THE
PRESIDENT’S PLAY?
PRESIDENT’S PLAY? 25 BASIS POINTS ISN’T HUGE.
IT IS UNPRECEDENTED WHEN YOU
LOOK AT THE ECONOMY TODAY,
VERSUS THE LAST TIME RATES WERE
CUT IN 2008.
DECEMBER 2008, IN FACT, WHEN WE
WERE IN THE THROES OF THE WORST
FINANCIAL CRISIS SINCE THE GREAT
DEPRESSION.
DEPRESSION. THE STOCK MARKET ALONE THIS YEAR
IS UP 20%.
IN 2008, IT WAS DOWN 37%.
SO IT’S VERY STRANGE.
NORMALLY YOU SEE A RATE CUT WHEN
WE’RE IN A DOWNWARD SPIRAL.
NOW THIS IS MORE THE FED LOOKING
TO SAY, LET’S KEEP THINGS
STABLE.
STABLE. LET’S KEEP THIS ECONOMIC
EXPANSION BEFORE THINGS TAKE A
DOWNTURN.
DOWNTURN. AND YOU HAVE HEARD FROM PEOPLE
LIKE JANET YELLEN WHO SAID THIS
IS NOT A BAD IDEA.
WHAT COULD BE THE CAUSE FOR
THIS?
THIS? THE GEOPOLITICAL RISK?
THE TRADE WAR.
THE PRESIDENT HAS PUT US IN A
POSITION WHERE THERE IS A LOT OF
GLOBAL UNCERTAINTY SO YOU CAN
LOOK TO THE PRESIDENT’S POLICIES
AND SAY, WAIT A MINUTE.
HE WANTED A RATE CUT AND HE
CREATED A SITUATION THAT
WARRANTED ONE.
WARRANTED ONE. >> AND TO THAT EXACT POINT, YOU
WRITE IN POLITICO, QUOTE, THE
FED HAS MADE CLEAR THAT TRADE
TENSIONS LOOM LARGE IN ITS
WORRIES ABOUT RISKS TO THE
ECONOMY.
ECONOMY. FACTORIES AND TECHNOLOGY PICKED
UP DURING THE FIRST HALF OF 2018
IN THE WAKE OF CORPORATE TAX
CUTS.
CUTS. THOSE INVESTMENTS HAVE FADED
MUCH FASTER THAN EXPECTED.
IS IT FAIR TO SAY THAT THIS IS
IN DIRECT RESPONSE TO THE
PRESIDENT’S UNCERTAINTY WITH
TRADE UNCERTAINTY ON THE
MARKETS?
MARKETS? >> NO QUESTION ABOUT IT.
J POWELL SAID EXACTLY THAT WHEN
HE TESTIFIED ON CAPITOL HILL
THIS MONTH.
THIS MONTH. ONE OF THE BIG THINGS THE FED IS
WORRIED ABOUT IS THE IMPACTñrñr
THE TRADE WAR ON THE U.S.
ECONOMY.
ECONOMY. THAT THE INCIDENT RATE CUTS FOR
THAT REASON.
THAT REASON. THERE’S GLOBAL GROWTH SLOWDOWNS
AS STEPHANIE MENTIONED IN EUROPE
AND ASIA AND THE FED WANTS TO
ISOLATE FROM THAT FALLOUT.
BUT YOU DON’T HAVE TO LOOK VERY
FAR TO SEE THE IMPACT.
YOU LOOK AT THE SECOND QUARTER
GROSS DOMESTIC PRODUCT.
IT ISN’T TERRIBLE.
IT’S FINE.
IT’S FINE. BUT BUSINESS INVESTMENT DROPPED.
WITH ALL THE CONSUMER DRIVING
GROWTH IN THE SECOND QUARTER.
YOU LOOK AT ANY MEASURE OF
MANUFACTURING, IN THE INDUSTRIAL
MIDWEST.
MIDWEST. IT IS IN RECESSION RIGHT NOW AND
THAT’S PARTLY DUE TO TRUMP’S
TRADE WAR AND PEOPLE ARE UNSURE
ABOUT WHAT FUTURE POLICY WILL
LOOK LIKE OF THE NOT BUILDING
NEW FACTORIES.
NEW FACTORIES. NOT HIRING AS MANY WORKERS AS
BEFORE.
BEFORE. IN A WAY, TRUMP IS GETTING WHAT
HE WANTS FROM THE FED.
AT LEAF PART OF IT.
NOT AS MUCH AS HE WANTS BUT HE’S
GETTING IT BECAUSE THE POLICIES
ARE BAD FOR THE ECONOMY.
>> THERE’S ALSO A DISCONNECT.
EVEN IF YOU’RE SEEING NEW
FACTORIES BUILT OR SEEING
BUSINESS INVESTMENT, THOSE
INVESTMENTS ARE IN TECHNOLOGY.
TECHNOLOGY AND AUTOMATION THAT
DON’T BRING FACTORY JOBS BACK.
FACTORY JOBS THAT NO LONGER
EXIST.
EXIST. SO IT DOESN’T SOLVE FOR WHAT THE
PRESIDENT’S CAMPAIGN PROMISE
WAS, WE’LL BRING THOSE JOBS
BACK.
BACK. WE’LL KEEP THOSE FACTORIES OPEN.
WE’RE NOT KEEPING THEM OPEN AND
THINGS OPENING UP NOW, THE
PEOPLE WHO NEED WORK DON’T HAVE
THE SKILLS FOR.
>> RIGHT.
>> RIGHT. AND ONE THING THAT CAUGHT MY EYE
IN THAT TWEET.
THIS IDEA THAT WE WILL WIN
ANYWAY.
ANYWAY. IS THERE A SENSE THAT THE
PRESIDENT IS PUSHING FOR THIS
PRECISELY BECAUSE HE WANTS AN
ADVANTAGE IN 2020?
>> SURE.
>> SURE. I MEAN, ANY PRESIDENT RUNNING
FOR RE-ELECTION WANTS THE
FEDERAL RESERVE TO BE EASING
INTEREST RATE POLICIES.
WE’VE SEEN WITH MULTIPLE
PRESIDENTS.
PRESIDENTS. THEY’VE PUT SOME PRESSURE ON TO
CUT RATES.
CUT RATES. HE ABSOLUTELY WANTS A LOWER RATE
ENVIRONMENT GOING INTO 2020.
HE WOULD LIKE TO SEE ANOTHER
CUT.
CUT. WE SHOULD KNOW WITH WHAT THE FED
DID, TRUMP HAS BANGED ON AND ON
ABOUT SOMETHING CALLED
QUANTITATIVE TIGHTTIGHTENING.
QUANTITATIVE TIGHTTIGHTENING. WE DON’T HAVE TO GET INTO WHAT
IT IS.
IT IS. >> IT’S BEEN A BOOGIE MAN FOR A
WHILE.
WHILE. >> TRUMP WAS VERY MAD THAT THE
FED WAS ROLLING BACK THAT POLICY
OF QUANTITATIVE EASING, TAKING
SOME LIQUIDITY OUT OF THE
ECONOMY.
ECONOMY. THEY’RE STOPPING THAT NOW.
THEY’RE STOPPING IT EARLIER THAN
THEY SAID THEY WOULD.
SO TRUMP IS GETTING HIS WAY ON
THAT.
THAT. WHAT HE’LL TWEET, THIS IS NOT