WTF is happening now?

Your daily review of what happened since the last time we talked.

> Trade war: Trump’s Treasury Secretary Scott Bessent said today [link] that there “will be a de-escalation” in the trade war with China that the US initiated, adding that “No one thinks the current status quo is sustainable.” Bessent called the potential negotiations with China a “slog”, and implied that it could take years for a full resolution.

> DOW: As of this writing, the DOW is up 1,000 points in a trading session that has been strongly positive from the start, perhaps due to Mr. Bessent’s comments.

> Gold: Gold is up almost $100 to $3,400. It’s now up over 10% this past month, and up 23% since Trump took office in mid-January. 

> IMF: The IMF said Trump’s tariffs will dramatically slow global economic growth. They reduced their FY25 global growth estimate from 3.3% to 2.8% [link], and said that further risks to the economy are “firmly tilted to the downside.” In the Philippines specifically [link], the IMF downgraded its estimate for our FY25 economic growth from 6.1% to 5.5%, and its estimate for our FY26 economic growth from 6.3% to 5.8%. 

MB bottom-line: The generally accepted reading of the situation between Trump and the Fed is that Trump’s attacks against Chairman Jerome Powell are meant to cast Powell as the one who is to blame for whatever near-term negative impacts on the US economy. Regardless of the problem (inflation spike, DOW crash, dollar crisis), Trump can just loudly screech about Powell’s failure to cut rates when Trump demanded as the reason for the problem. Powell will become the “Fauci” of the economy, which isn’t great, since Trump’s own ideas are terrible, and it won’t help the global crisis if we’re constantly being dragged back to address plainly incorrect points from the most powerful person in the world.

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