AS “the news” continues to obsess over the Fed and interestrates as their “reason” for what moves the stock market, and in particular lately whether Donald Trump intends to “fire” Fed Chair Powell, as usual they are missing the forest by staring at a tree, the purpose of which is to create an artificial drama which is easy to gossip about endlessly and feeds into the kind of reductive thinking that captures the shallowness of the 7 ½ minute attention span.
No.1
Interest rates are of course important – both to markets andthe economy – but the stock market is currently far more interested in trying to grasp and value a transition to a new advance in technology centered around artificial intelligence.
The main issues for the stock market are evaluating whichcompanies will actually make money from AI, whether the deployment of capital into huge AI data centers will be justified, where the energy to run these data centers will come from, and who will be first to declare that AGI, or Artificial General Intelligence, has arrived.
As with all new technology waves throughout history, thecompetition is fierce, exciting, and justifiable. The question, as always, is who will be left standing and who will be discarded by the side of the road.
This is what is currently moving stock market prices.
No.2
THE endless drama of Donald Trump is, as always, a story ofpersonal aggression cloaked in deliberately deceptive technique, but in the end mainly focused on Donald Trump.
As I said, the manufactured “story” of whether Trump will“fire” Powell over his refusal to cut interest rates is for the benefit of eyeballs and, forgive me, Trump’s balls.
And what “the news” doesn’t grasp is that Trump wants Powellaround at the moment, even as he undercuts him with insults befitting of his need to have a whipping boy to bully.
That way he has an out if the economy – or markets – tank between now and next May (when Powell’s term as Fed Chair is up). He’ll have the perfect punching bag for any time he’s in need of distracting and deflecting unwanted attention from his economic policy (i.e., tariffs if they
produce inflation, or worse) and his personal travails (i.e., Epstein et al).
If markets fall, it’ll be “Powell’s fault.”
If Trump’s popularity falls, it’ll be what he’ll call the“greatest hoax in the history of the Presidency” (i.e. Epstein, Epstein, Epstein… instead of Russia, Russia, Russia…).
THIS is Trump’s M.O. in a nutshell: deceive, deflect, andundercut with punches below the belt if necessary.
Will Trump “fire” Jay Powell before his term is up?
If it suits his need to blame others when things go bad.
Will he take all credit if things go good?
Is there a better looking tree in the forest than the bigbeautiful Trump tree…?