Market Overview

Trump Said If Rates Go Up, It Won't Be Pretty; Market Still At All-Time Highs

Trump Said If Rates Go Up, It Won't Be Pretty; Market Still At All-Time Highs

Fortunately for U.S. investors, at least one of President Donald Trump’s predictions about the stock market has been completely wrong so far. During the 2016 campaign, Trump famously said that rising interest rates would burst a stock market bubble.

“If rates go up, you’re going to see something that’s not pretty,” Trump said in an interview with Fox News in August 2016. “It’s a big bubble.”

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All-Time Highs

Since that interview, the Federal Reserve has raised interest rates three times, yet the SPDR S&P 500 ETF Trust (NYSE: SPY) is up 10.9 percent and U.S. indexes consistently made new all-time highs in the first half of 2017.

Back in March, Trump took credit for the surge in the stock market with no mention of the bubble he suggested months prior.

"Since November 8th, Election Day, the Stock Market has posted $3.2 trillion in GAINS and consumer confidence is at a 15 year high. Jobs!" Trump tweeted.

Softening Up On The Fed

Trump has even softened his stance on Federal Reserve chair Janet Yellen. Prior to the election, Trump said Yellen had colluded with President Barack Obama to keep interest rates artificially low and hurt retirees because she is a “very political person.”

“They worked all their lives to save and now what happens is they’re being forced into an inflated stock market and at some point they’ll get wiped out,” Trump said.

Trump even went so far as to say Yellen should be “ashamed” of what the Fed has done to the country.

However, when the Wall Street Journal recently asked whether Yellen will be “toast” after her term as chair expires in February 2018, Trump changed his tune.

“No, not toast. You know, I like her, I respect her. She’s been here. She’s been in that seat. I do like the low interest rate policy.”

While Trump’s positions can be frustratingly hard for investors to pin down at times, at least one voice has been consistent throughout the current presidency and the previous one.

"We do not discuss politics at our meetings and we do not take politics into account in our decisions," Yellen said during a press conference last year.

Image Credit: By Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0], via Wikimedia Commons


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