Did President Trump Just call the Fed to Remind Them Who’s Boss?
“I don’t care what you want to do, Graham. This is my business and we’re going to go with my idea.”
I’m a hot shot analyst in my mid-20s. I’m making six figures a year and have just spent the last year visiting Dubai, Singapore, and Switzerland researching overseas investments for a new product my firm would soon launch.
Suffice to say, I thought I was hot stuff.
And I’m about to get a major lesson in how the business world works.
My boss and I are having a major disagreement on which investment we should recommend to clients for the first investment pick. I want to go with a Brazilian steel company that owns its own iron mines (greatly reducing its operating costs). My boss wants me to recommend a real estate trust based in Vienna as a back-door play on Russia’s real estate boom.
What followed was an intense five-minute debate that ended with the above quote. And that’s when I learned: in business, it doesn’t matter how smart you are or how compelling your arguments sound. At the end of the day, you do what the boss wants.
I was reminded of this experience last week when I noticed that the Fed’s balance sheet exploded upwards by $16 BILLION in a single week.
The chair of the Federal Reserve, as well as most of its board, are picked by the president of the United States. And while the Fed claims to be apolitical, we all know that the president is ultimately the Fed’s boss.
History is replete with examples of Fed chairs kowtowing to various president’s agendas, regardless of their differences of opinion.
Which is why I have a sneaking suspicion that President Trump made an unscheduled phone call to Fed Chair Jerome Powell two weeks ago and reminded Powell just who’s calling the shots…
Let me explain.
The Fed is Back to Printing Money
Up until last week, the Fed’s balance sheet, which serves as a measure for how much liquidity the Fed is providing to Wall Street, was actually DOWN for 2020. And it had effectively flat-lined since December 2019.
This was unusual considering the Fed is currently supposed to be supplying $60 billion in liquidity to the financial system every month as part of its quantitative easing (QE) program. Technically, the Fed’s balance sheet should be rising rapidly – not flat lining.
We know from previous Fed statements that the Fed has had major disagreements with President Trump on Fed policy. And we also know that President Trump “invited” Fed Chair Powell and his No. 2 to an unscheduled dinner at the White House around this time last year.
Up until that point, the Fed had shrunken its balance sheet by $400 billion and was raising interest rates aggressively. But after that dinner, the Fed stopped BOTH policies rather quickly and began easing monetary conditions.
And not by a little… the Fed cut interest rates three times and then expanded its balance sheet by $100 billion per month for three months straight
Up until mid-December 2019.
This is why I believe President Trump called the Fed a few weeks ago and reminded them just who’s in charge. Because suddenly, the Fed balance sheet is back to expanding at a rapid clip.
Not only that, but according to my research, the Fed looks to also be involved in manipulating the stock market higher whenever stocks come in danger of breaking down…
We Have the Opportunity to Make a Fortune
I want to be clear here: I’m not talking about the Fed intervening indirectly in the stock market via interest rate cuts or QE… I’m talking about the Fed actively buying stocks directly to stop the market from breaking down.
They do it by intervening in the four largest stocks in the market: Facebook, Amazon, Apple, and Microsoft.
These stocks make up 11% of the stock market.
If you can make them soar, the rest of the market will follow the leaders.
Basically, the Fed has figured out that they don’t need to prop up the entire market to boost prices.
It just has to boost these four stocks. And based off my research, that’s precisely what I believe it does.
My research reveals that the Fed regularly pours big money into these four stocks when market weakness rears its head – typically around 30 minutes into the trading day.
When it does, it creates a very distinct pattern that I call “ghost money.”
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Editor, Money & Crisis