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The Fed and Donald Trump

1/5/2017
By Charles Payne, CEO & Principal Analyst

After years of lamenting over the fact that the fiscal policy never augmented or mirrored its monetary policy, the Federal Reserve Open Market Committee (FOMC) gathering was all about Donald Trump and his new approach to growing the economy. The fiscal policy was mentioned just once in the November meeting, and 14 times last month.  Essentially, the Fed is concerned about Trump’s administration pushing through policy proposals and campaign promises. 

The Fed is also connecting dots that point to a potential increase in consumer spending:

  • Stronger employment
  • Higher real disposable personal incomes
  • Higher levels of household worth
  • Increasing consumer sentiment readings 

There is a chance that the economy could grow too fast, forcing the Fed to become more aggressive. For me, reading between the lines, there seems to be a relief that the government will now be focused on growth rather than social justice and wealth redistribution.

Keep in mind that the Fed is hiking rates because the economy is on fire, which isn’t a bad thing or a death knell for the rally.

Charles Payne
Wall Street Strategies


Comments
I fear the Fed will not raise rates because they know Trump wants to add another trillion to the charge card

Bette McSheffery on 1/11/2017 6:48:47 PM
 

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