Soros Fund Co-Founder Jim Rogers on China and Global Investment

Jim Rogers has been fascinated by China since he drove his motorcycle across the country in the 1980s. The investing legend joins Real Vision to give his view of the rising Asian superpower and, more broadly, on rising Asia in general. Rogers provides his views on the Hong Kong crisis and the simmering trade war. He also weighs in on whether the era of US dollar primacy has passed — especially now that the United States has become, in Rogers’ view, “the largest debtor nation in the history of the world.” Filmed on September 10, 2019 in Singapore.

You know the rest of the story, you know what happened there, but Mr. Trump is smarter than
history so we don’t have to worry.
Mr. Trump knows he can handle history and none of us should worry, because he’s smarter
than history.
Even though people say trade wars are bad, and often lead to shooting wars, don’t worry,
I’m smarter than history.
MATT MILSOM: He does seem to be able to just move to the next person once he’s had– go
at somebody then it slackened off, just goes to next target is going to be Europe, once
he’s done with China, even though nothing’s actually resolved.
JIM ROGERS: The problem, Matt, is that when things get bad, so far the American economy
has held up well because of a lot of money printing, out of government spending, cut
taxes, everything possible to hold up the American economy has held it up.
When things get bad in America as they will, Mr. Trump is not going to say, “It’s my fault.
I got it wrong.”
Donald Trump is going to say those evil Germans, those Koreans, those Canadians, and he’s going
to come back hard with more and more whatever you want to call it.
The situation, we’re going to have the worst bear market in my lifetime.
I can tell I’m older than you, so it’s going to be the worst in your lifetime, too.
What I suggest you do is watch Real Vision, and you’ll get educated, and you will see
how bad things are.
Then you’ll get there.
Most people will turn on the internet or turn on the TV, say, “Wow, look at this.
Things are great.”
Mr. Trump tells you every day, if you watch American TV, he will explain you things are
really, really very good.
You don’t worry.
Maybe you need somebody crying wolf, maybe you need somebody saying, “Wait a minute,
guys, wait a minute.
Look at this.”
Maybe Real Vision is the last vision for all of us.
MATT MILSOM: You think he gets back in?
JIM ROGERS: Get back into what?
MATT MILSOM: Trump 2020?
JIM ROGERS: I got to respect you, what I think it’s– I know it’s very hard to dislodge a
sitting president in America for many, many reasons.

I would suspect that’s the same to this time.
Now, we got rid of Coolidge, and Hoover.
We got rid of Hoover because the market collapsed but we don’t have much time for that because
the election is only, what, 13-14 months away now.
If the market really collapses in the next 13 or 14 months, then I would change my view,
but there are enough things he can do, which is why it’s hard to get rid of sitting presidents.
They’ll prop things up long enough to get through the election.
I would, if I were betting and I’m not a betting man, but if I were, I would bet that Trump
will be reelected.
MATT MILSOM: A lot of speculation that he might actually start to swerve the Fed and
play the currency markets himself for the Treasury.
JIM ROGERS: What, Trump will start buying what?
US dollars or renminbi?
What’s he going to buy?
MATT MILSOM: He’s going to be selling dollars.
JIM ROGERS: He could do that.
Yes, and he might.
He cannot force the Fed to do it.
No, but he could, he could browbeat him.
He can certainly force the Treasury to do that, to sell US dollars.
First of all, I’m not sure the market would put up with it, it would for a while, obviously,
it would for a while, but eventually, the market, as I said to you before, I mentioned
the market’s going to say to these guys, “We’re not going to play this game anymore.
This is an absurd, ludicrous game.
It’s never happened before.
We know it’s not going to work.
We’re not going to play anymore.”
Okay, maybe we’ll try.
I don’t think it’s enough.
Maybe it’s enough to save the election, I said to you before.
It’s so difficult to dislodge a sitting president.
There are lots of things he can do.
If he needs votes in that state, he spends a lot of money in that state.
His opponent cannot do that, the opponent can say look, what a terrible person he is.
He’s spending money in your state.
The people say, thank you, thank you spend more money in my state.
We’ll vote for you.
MATT MILSOM: He can almost play the Fed to his own fiddle, I guess at the same time.
He can blame them if it goes– JIM ROGERS: He certainly can blame them, whether he can
persuade them.
He seems to be persuading them now is another question, but sure.
That’s what I mean, if he goes in there and threatens them, or does x or does y, sure
he can.
That’s the problem when you’re the president, or the advantage when you’re the president.
MATT MILSOM: I see Powell’s having a bit more backup by myself.
I just think he’s his own guy.
Really, he’s not a PhD Economics.
He’s a– JIM ROGERS: That’s the best news.
I believe PhDs, which is bad news.
We’ll see.
MATT MILSOM: I could see that arising a bigger conflict there, you think between Powell and–
JIM ROGERS: No, I can see a huge conflict and that’s going to– the Federal Reserve,
its debt went up by five, six times in 10 years.
If I had said to you 20 years ago, a major central bank in the world is going to increase
the debt on its balance sheet by 500% in 10 years, you’re going to say, “Get out of here.
We’re not going to talk to you anymore.
You’re not even smart enough to talk on TV.
What are you talking about?”
It’s inconceivable that it could have happened, but it’s happened.
Sure, they have a problem, too.
How far can they go?
How far can any of us go?
MATT MILSOM: It surprised me the volatility’s so cheapened right now.
JIM ROGERS: The debt worldwide is the highest in world history.
Interest rates are the lowest in world history.
In 2008, we had a big debt problem.
China, which had a lot of money saves for a rainy day, started spending the money and
helped save the world, but even China now has debt.
China can’t save the world anymore.
The central bank came riding in with its printing presses, helped save the world.
That’s getting late for all the printing presses in the world.
It’s getting late in the day.
MATT MILSOM: Is the rate of change as well as a debt in China that’s extraordinary just–
JIM ROGERS: Oh, no, I know.
To repeat, ports in China has said we’ll let them go bankrupt.
I don’t think they will.
Not that they’re lying, I think they believe that they’re going to let people go bankrupt
but they haven’t had this problem in decades.
They’re bureaucrats and they’re academics, haven’t felt the pressure of people calling
up saying, “You must save Chinese civilization.
This is Chinese history, our image our integrity.”
No, they haven’t had that gigantic pressure from everybody in the country, they’re saying,
“Save Chinese civilization.”
What they really mean it save me.
They haven’t had that yet.
MATT MILSOM: Xi as a link leader seems to be much more of a Maoist than ever before,
to me.
JIM ROGERS: I’m not sure Maoist, but they’re certainly closing off in that sense.
Deng Xiaoping started opening up and Deng Xiaoping said you open the windows, you’re
going to get some flies, but you’re going to get fresh air and sunshine, and the fresh
air and the sunshine are worth the flies.
He seems to be saying we don’t want flies and the last 40 years, much of the progress
has been 18-year-olds in a garage doing crazy things on the computer.
Alibaba, Microsoft, the names go on, and on and on.
These were just kids doing wild, crazy things on the internet, which was open and free to
nearly everybody.
You start closing these things off, and it’s going to slow progress, it’s going to slow
things now, whether we like it, history is always showing that.
You close off and you go into decline.
It does seem to be happening not just in China, even in the US, but it does seem to be happening
more and more, so maybe we’re in for the dark ages again.
MATT MILSOM: I don’t know.
It’s almost that you think about where you’re going to head or what currency you need to
get into, where you’re going to be safe.
Do you know what I mean?
You start thinking about– JIM ROGERS: That’s not what I mean.
I don’t have a job.
I can’t figure out a way to save myself.
MATT MILSOM: You made the move to Asia on the back of those thoughts, I guess that that’s
going to be a Pacific centuries.
JIM ROGERS: Well, I moved here you because I know that the 20th century is Asia, 21st
century is Asia.
I wanted my children to know Asia and to speak Mandarin.
That’s the best preparation I can give them for the 21st century.
That’s why I’m here.
Of course, Asia is continuing to develop and boom and head of the rest of the world.
There is some debt in Asia, but nothing like in the West.
Most of the Western countries are really broke, especially when you pull into pension plans.
Europe’s got gigantic pension, US too, gigantic pension obligations, which they’ll never able
to [indiscernible].
Demographically, where does that end up?
JIM ROGERS: It’s already starting to ruin a lot of people.
Asia has probably– will have problems but nothing like some that are rising in the West.
I can’t bear for my kids.
MATT MILSOM: The world of agricultural investment view is still a– JIM ROGERS: Yeah, agriculture
has been a disaster for 35 years or so.
The average age of farmers in America is 58.
More people in America study public relations and study agriculture.
The highest rate of suicide in the UK is agriculture.
Of Japan, the average age of farmers is 68.
Nobody becomes a farmer, you go to Japan now, there’re huge stretches of land, they’re just
They can’t find anybody to farm them.
Farmers have died, the kids have gone to Osaka.
There’s nobody to farm that land.
If you want to be a former, go to Japan.
You can get a lot of land cheap.
That’s true.
Australia, Canada, all of these countries have very, very aged old farmers, men and
It’s millions of Indian farmers have committed suicide, as I’m sure you know.
No, no, agriculture is a disaster.
The Chinese have a word, you know the Chinese word weiji?
It means disaster and opportunity are the same and they are.
If you can survive the disaster, you’re going to make a lot of money with the opportunity.
MATT MILSOM: I guess the commodity complex per se, are softer on their knees-ish for
the last five years.
They’re actually doing okay in the States.
JIM ROGERS: Yeah, yeah.
Things like sugar, sugar is down over 80% in the last 40 years, what do you notice down
80% in the last 40 years?
My IQ.
Other than that, there’s not much that has declined, that deteriorated like some of the
agricultural products.
MATT MILSOM: Difficult bet to make given the climate change, too?
JIM ROGERS: Well, yeah, climate change is taking place, is taking place for thousands
of years.
Go back and look at trees, and soil layers and iceberg layer, we see that climate change
has always been taking place one way or the other, and it seems to be happening again.
Of course, that’s going to be great for some farmers, disastrous for other farmers.
The key is to be the farmer that it’s great for, not to be a farmer that gets wiped out
because of climate change.
The Sahara Desert, which is the size of the continent with 48 states, used to be a huge
agricultural area.
Pigs, cows, wheat, corn, everything, huge, huge.
We had climate change.
We had ecological change, you know the rest of that story.
If you were a farmer in Algeria 2000 years ago, you probably didn’t do very well.
You should have moved to Iowa 2000 years ago.
MATT MILSOM: Would it be too much to ask your asset allocation now?
JIM ROGERS: You can ask, I don’t know.
I don’t sit around.
I don’t have a committee met.
I don’t have anybody to answer to.
I know I can still pay my bills.
I do own some gold and silver.
I do own a lot of US dollars, I’ve told you about.
I’m short some junk bonds, short the ETF, Russia, China.
I don’t own a lot of shares anywhere right now.
The Japanese market, I sold out of.
I used to own a lot of Japanese shares, sold out completely.
MATT MILSOM: Why was that?
JIM ROGERS: I bought them so well.
It’s not often I get it right so I’m going to brag for a minute.
The Japanese market was very, very cheap and I started by and then the tsunami.
Remember the tsunami?
Everything collapsed, I bought a little, gone up a lot, it tripled since then.
I could see wasabi and the toll got stronger and stronger and stronger.
They’d already printed lots of money.
The central bank said we’ll print as much as we have to.
That’s what they said.
They said it out loud.
Not some crazy guy saying it.
I said what else can happen?
What else can go right?
They’ve spent a lot of money on infrastructure.
They bought a lot of securities, so I sold out.
So far, I’m right, but don’t worry, I make plenty of mistakes.
MATT MILSOM: I guess, it changed your beast, don’t even trade anymore, eh, because there’s
no float?
JIM ROGERS: Nothing to trade, why would you buy them?
Who’s going to buy them, except a central bank?
MATT MILSOM: They have to keep going?
JIM ROGERS: I told you I have.
I’m going to Japan tomorrow, there’s been a best seller saying, “A Warning to Japan.”
If they keep going– MATT MILSOM: That’s a book?
MATT MILSOM: Sorry, I didn’t know that.
JIM ROGERS: No, it’s the number one bestseller.
MATT MILSOM: Congratulations.
JIM ROGERS: I’m shocked.
I’ve made two number one bestsellers.
MATT MILSOM: What was the other one?
JIM ROGERS: I forget that, it was some Japanese.
It was something like, “A Warning to Japan.”
MATT MILSOM: But this is a specific for that market, or they were– JIM ROGERS: Two books
in Japanese.
They were translated, my English was translated into Japanese.
Two books in 2019 have been number one bestsellers by me.
This is a shock.
How could this happen?
I’m more surprised than anybody.
They called me up, that smarty say you got to come to Tokyo.
I said why?
He said your books have won bestseller.
I forgot about the book.
The book resulted from some reporters coming here and interviewing me like you.
We’re out for several hours.
I said we’re going to publish this.
Okay, go ahead.
I don’t care.
Forgot about it.
MATT MILSOM: You got a book tour now?
JIM ROGERS: Yeah, I’m leaving tomorrow.
I’m going tomorrow for a book tour in various cities of Japan, promoting, “A Warning to
MATT MILSOM: What was the essence of that?
Was that demographics or that– JIM ROGERS: If you’re 10 years old, you better get out.
If you’re 10 years old, you better get an AK47 and learn how to use it.
These are not– it’s simple.
I say to them, they will say, of course, he’s a foreigner.
Don’t worry.
The Japanese don’t like foreigners, and so they will just say, he’s a– whenever they
say they don’t like somebody, they say he’s a foreigner so you don’t have to listen to
I say to them, yeah, okay, I’m a foreigner, but this is arithmetic.
It’s addition, the debt goes up every day.
That’s simple addition and it’s subtraction, the population goes down every day.
Central bank has been printing huge amounts of money.
This is just simple addition and subtract.
Forget that I’m foreigner and for some reason, both of them became number one bestsellers.
I guess it’s because nobody in Japan ever says things like this.
I don’t know why I became, but listen, I’m shocked.
MATT MILSOM: Do you have any views on Softbank?
JIM ROGERS: So far, they’ve made a lot of money but I don’t know enough to say much
more than that.
I read that problems are developing, but I have no knowledge, enough knowledge to say
anything other than that.
MATT MILSOM: I guess WeWork is the speculation for those issues there, for the float.
JIM ROGERS: WeWork is not their only asset at Softbank.
What I read about WeWork, WeWork may be one of those things.
You remember in 1999?
I think it was called or something.
It was one of those things that was when people talk about the end of the bull market or the
signal, or the sign that it was over, that may be WeWork now.
They were printed out in 1999.
That’s the one that people often bring up, I was not sure.
I wish I had but they bring that one up.
Now, if you look at the current bull market, maybe someday in 10 years, we’re all going
to look back and say, “They rang that bell.
That bell was called WeWork.
That was the sign that we were coming to the end.”
It’s always something that people look back on that it may be WeWork.
MATT MILSOM: The amount of questioning that browned the IPO pricing makes you think that
the greater fool game may have just come to a grinding halt.
JIM ROGERS: I’ve never read the Prospectus but I’ve read a lot in the papers about the
story, the company, that IPO, the CEO, etc.
Just I’m sure you have too.
I read it and I say this is 1929, this is 1999.
This has all happened before.
MATT MILSOM: They have nines in them.
See, 1899– well, anyway, you read, I read this stuff and I’d say oh, yeah, this has
happened before.
I remember reading about things like this in previous bull markets, previous bubbles.
MATT MILSOM: What brings you to an investment then?
Is there a sector or there is an idea or somebody pitches to you?
JIM ROGERS: No, it’s usually– the nature of who I am, I’m always looking or I’m always
If I stumble on something, I’m not out looking like I used to, but if I stumbled on something,
I often do homework and then I’m in this Russian stock that I’m buying, I stumbled on it.
The more homework I do, the more I buy.
I continue but it’s usually I will stumble on something.
MATT MILSOM: Public, is it a public stock?
JIM ROGERS: Yeah, it’s a public company.
Which sector would have been?
JIM ROGERS: You’re a very good reporter, but I’m not going to tell you because if I told
you, you would know exactly what I’m buying.
I’m sure it wouldn’t be that easy to spot.
JIM ROGERS: There are plenty of disasters in Russia.
Everybody hates Russia now, so Russia’s on my list.
Anyway, I will probably buy Russian government bonds and rubles again soon.
I own Russian government bonds in rubles.
The yield is very, very high.
The ruble is hated.
The Russians are hated, et cetera.
MATT MILSOM: Any other markets that are particularly hated that you fancy?
JIM ROGERS: Well, I told you Venezuela but you and I cannot do it.
I cannot do anything in Venezuela.
Zimbabwe, I bought a few shares of Zimbabwe, some of the North Korea but that’s illegal,
I’m looking, but part of the problem is there are few markets that are hated so much.
I mean I am buying Russia, it’s still hated.
Most markets, even Germany.
Look at Germany hit peak, what, two years ago.
Been going out since but it’s not cheap.
It’s not hated.
Germany still a very large and [indiscernible] economy.
No, I don’t see many now that jumps off the page to me and says, oh my God, you got to
buy this disaster.
I would love to find something like that, but I’m too lazy.
MATT MILSOM: I’m thinking there’s probably a good places to stop.
JIM ROGERS: I’m too lazy.
Very good places to stop buying, I commend laziness to all of you.
Watch Real Vision and get lazier and lazier, and lazier.
MATT MILSOM: Jim, thanks for having us and thanks very much for coming on.
JIM ROGERS: My delight, my pleasure.

Fed Could Hit Back at Trump, a Former Top Official Suggests

WASHINGTON — A former top Federal Reserve official implied that the central bank should consider allowing President Trump’s trade war to hurt his 2020 election chances, an assertion that drew a firestorm of criticism and a rare pushback from the Fed itself.

William Dudley, the former president of the Federal Reserve Bank of New York and now a research scholar at Princeton University, said in a Bloomberg Opinion piece that “Trump’s re-election arguably presents a threat to the U.S. and global economy.” Mr. Dudley added that “if the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.”

It is a controversial statement, particularly coming from an official who ranked among the Fed’s most powerful policymakers as recently as 2018. It also comes at a sensitive moment for the Fed, which has been under attack from Mr. Trump and trying to assert its independence from the White House and politics in general.

“The Federal Reserve’s policy decisions are guided solely by its congressional mandate to maintain price stability and maximum employment,” Michelle Smith, a Fed spokeswoman, said when asked about the column. “Political considerations play absolutely no role.”

Mr. Trump has waged a yearlong campaign to pressure the Fed to cut rates, accusing the central bank of hurting the economy by keeping rates too high and putting the United States at a disadvantage to other nations, like China and Germany.

The Federal Reserve loves watching our manufacturers struggle with their exports to the benefit of other parts of the world,” Mr. Trump said in a tweet on Tuesday. “Has anyone looked at what almost all other countries are doing to take advantage of the good old USA? Our Fed has been calling it wrong for too long!”

The attacks have put the Fed on the defensive, prompting top officials including Jerome H. Powell, the Fed chair, to insist that the central bank sets policy to achieve economic goals without taking politics into account.

The Fed cut rates for the first time in more than a decade in July and has kept the door open to future cuts, with Mr. Powell saying the central bank is prepared to act to protect the economy against slowing global growth and as Mr. Trump’s trade fights stoke uncertainty.

Mr. Dudley essentially said the Fed should wade into politics, arguing that the central bank should consider the political ramifications of the policy decisions it makes. By lowering interest rates to offset economic harm caused by Mr. Trump’s trade war with China, Mr. Dudley said the central bank could give the White House room to ramp up trade tensions.

“The central bank’s efforts to cushion the blow might not be merely ineffectual,” he wrote. “They might actually make things worse.”

The opinion piece comes as the Fed has been under attack from Mr. Trump and trying to assert its independence from the White House and politics in general.
CreditLexey Swall for The New York Times

Fed watchers responded to Mr. Dudley’s piece with widespread concern, asserting that it could feed conspiracy theories that the central bank is trying to influence political outcomes.

“The Fed for decades has scrupulously avoided doing that, and has tried to avoid giving that perception,” said Adam Posen, the president of the Peterson Institute for International Economics. “And this isn’t some ‘deep state’ fake: They genuinely don’t want to get into it, because ultimately they are accountable to Congress.”

Mr. Trump announced an escalation of the trade war with China just a day after the Fed cut rates in July, and the concern that Fed policy is enabling the tariffs is often repeated by analysts. Michael Strain at the American Enterprise Institute said it was a valid point to raise and consider.

But Mr. Strain pushed back against the idea that the Fed’s policymakers should try to guide political outcomes.

“It’s wildly irresponsible,” he said. “The Fed is not elected; it is appointed. It has a responsibility to adhere to a narrow reading of its mandate.”

The central bank’s leadership consists of 12 regional presidents, who are selected by businesspeople and community leaders from their districts and who share four annually rotating votes on interest rates. The New York Fed president is the most powerful regional leader and has a constant vote on policy.

The rate-setting committee also includes seven governors who are nominated by the president and confirmed by the Senate. Only five of those positions are currently filled, although Mr. Trump has said he intends to nominate another two members to the Fed.

The Fed does not answer to the White House by design: It is removed from politics so that it will make better long-term decisions for the economy, rather than trying to goose the economy going into election years. It is, however, responsible to Congress, which can change the rules that govern it.

That insulation has, historically, helped to fuel criticism that the Fed is removed from the public and in the pocket of bankers. The central bank has long been the target of conspiracy theories, and popular books about it have borne titles like “Secrets of the Temple.”

More recently, the president has placed the central bank firmly in political cross hairs. In a Twitter post last week, he asked whether Mr. Powell or President Xi Jinping of China was a “bigger enemy” of the United States. Mr. Trump has reportedly considered firing or demoting Mr. Powell in the past, and he recently told reporters that he would accept Mr. Powell’s resignation if it were offered.

Despite that pressure campaign, Fed officials have repeatedly pushed back against the idea that they would in any way take the White House’s comments or potential actions into account when setting policy.

“We’re never going to take political considerations into account or discuss them as part of our work,” Mr. Powell said at a news conference in January. “We’re human. We make mistakes. But we’re not going to make mistakes of character or integrity.”

Trump Calls for a Big Fed Rate Cut, Again Criticizes Central Bank Chairman

President Trump on Monday called for the Federal Reserve to cut its benchmark interest rate by 1 percentage point, a move that would typically be considered only when the U.S. economy is on the brink of a recession, and again criticized his own central bank chairman for a “horrendous lack of vision.”

In a pair of tweets Monday morning, the latest in a series of attacks Mr. Trump has levied against Fed Chairman Jerome Powell, the president said a combination of a reduced interest rate and a resumption of the Fed’s crisis-era bond-buying stimulus would improve the economy both in the U.S. and globally. “Good for everyone!” Mr. Trump tweeted.

Mr. Trump, who returned Sunday from a 10-day vacation at his golf course in Bedminster, N.J., has repeatedly attacked Mr. Powell for the state of the economy, even as he and his advisers have projected optimism that the decadelong economic expansion will continue. Mr. Trump has repeatedly called on the central bank to lower interest rates more than it has, saying that would further boost growth. U.S. economic growth slowed to 2.1% in the second quarter from 3.1% in the first three months of the year.

Last Wednesday, on a day when the Dow Jones Industrial Average slumped 800.49 points, or 3%, the president spent much of the day attacking the Fed chairman on Twitter.

White House and campaign aides acknowledge privately that a recession would threaten Mr. Trump’s 2020 re-election campaign, which has made a booming economy a central selling point. On Tuesday, the White House has arranged a call in which National Economic Council Director Larry Kudlow is expected to reassure state and local officials about the state of the economy.

Asked in an interview on Fox News about possible economic alarm bells, White House counselor Kellyanne Conway on Monday played down the chance of a slowdown.

“It’s nice to have the mainstream media finally covering the economy, but they only cover it when they can use Sesame [Street’s] Grover word of the day, ‘recession,’ ” she said. Pointing to strong employment numbers, she said the economy’s “fundamentals are very strong.”

The last time the Fed reduced rates by a full percentage point was during the 2008 financial crisis.

No Wonder the Economy Has Trump Spooked

Despite gyrations on Wall Street this week and an associated rise in recession fears, Donald Trump is still ballyhooing the state of the U.S. economy. In private, however, the President sounded “nervous and apprehensive” when he called a number of business leaders and financiers from his New Jersey golf club to get their opinions, the Washington Post reported.

Small wonder. With his personal-approval ratings stuck in the low forties, Trump’s 2020 reëlection campaign hinges on a healthy economy. He can be pretty confident that his core supporters will turn out for him, but he also needs to win over some less committed voters. His pitch to them is one that the British Conservative Party used successfully in 2015, during a general election, when it talked up the U.K. economy and issued dire warnings about the consequences of a victory for the opposition Labour Party.

One of the Conservatives’ campaign slogans was “DON’T LET LABOUR WRECK IT.” Substitute “THE DEMOCRATS” for “LABOUR” and you have Trump’s campaign strategy in a nutshell. Addressing a campaign rally in New Hampshire on Thursday night, he portrayed the Democratic candidates for President as “a bunch of socialists or communists” and asked the crowd, “Does anybody want to pay a ninety-five-per-cent tax?” He also suggested that a Democratic victory would lead to a crash in the stock market, adding, “You have no choice but to vote for me, because your 401(k), everything is going to be down the tubes. Whether you love me or hate me, you have got to vote for me.

The mere fact that Trump’s strategy is based on scaremongering (under Barack Obama, the Dow more than doubled) and outright lies (Joe Biden is a socialist?) doesn’t mean that it can’t work. In 2015, the British economy wasn’t doing great at all. Held back by five years of Conservative austerity policies, it hadn’t even fully recovered from the Great Recession. But the Conservatives, aided by their allies in the British media, managed to raise enough doubts about Labour’s economic competence to gain an over-all majority in the House of Commons. As long as the U.S. economy looks strong, the possibility of something similar happening in November, 2020, can’t be ruled out entirely, despite Trump’s unpopularity.

But, if the economy turns south between now and the election, Trump will almost certainly be defeated, and he knows it. Hence his delay, earlier this week, on expanding tariffs on Chinese imports, and his increasingly frantic efforts to scapegoat the Federal Reserve and its chairman, Jerome Powell. As the Dow plunged on Wednesday, Trump took to Twitter, calling Powell “clueless” and retweeting guests on Fox Business who were criticizing the Fed’s recent policy moves.

In the two days since the big fall in the stock market, we’ve received some new economic data, and it has been mixed. On Thursday, the Commerce Department reported that retail sales expanded by 0.7 per cent in July, the strongest figure since March. Economists responded by raising their estimates of third-quarter G.D.P. growth to about two per cent. That’s a long way short of the four-per-cent growth that Trump promised, but it’s also well above recession levels.

At the same time, the Fed confirmed that the manufacturing sector is in a slump. Manufacturing output fell 0.4 per cent in July, the central bank said, and it is now about 1.5 per cent below its December, 2018, level. For a President who promised to restore manufacturing to its former position of prominence, that can hardly be reassuring. Neither can the news, on Friday, that the University of Michigan’s survey-based index of consumer confidence fell sharply in August, reaching its lowest level since 2016.

The fall raised concerns about whether strong consumer spending will continue to underpin the economy, and it also illustrated that Trump’s aggressive tactics in the trade war are backfiring. “Consumers strongly reacted to the proposed September increase in tariffs on Chinese imports, spontaneously cited by 33% of all consumers in early August,” Richard Curtin, the chief economist at the Michigan survey, noted. The White House has now postponed the higher tariffs until December. That may reassure some consumers, but this week’s fluctuations in the stock market are likely to add to their jitters.

To be sure, none of this means that a recession is imminent. Most economists are predicting that the G.D.P. will continue to rise, albeit at a modest pace. Citing continued growth in jobs and household incomes, Curtain said “it is likely that consumers will reduce their pace of spending while keeping the economy out of recession at least through mid 2020.” The most recent statements from the Fed indicate that it agrees with this assessment.

Despite all his bluster, Trump seems spooked. According to the Washington Post report, he has been “telling some confidants that he distrusts statistics he sees reported in the news media and that he suspects many economists and other forecasters are presenting biased data to thwart his reelection.” These sound like the ravings of an egomaniac who sees the world closing in on him.

China Hardens Trade Stance as Talks Enter New Phase

Chinese negotiators emboldened by perception U.S. was willing to compromise

The hardened battle lines were prompted by Beijing’s decision to take a more aggressive stance in negotiations, according to the people following the talks. They said Beijing was emboldened by the perception that the U.S. was ready to compromise.

  1. In particular, these people said, Mr. Trump’s hectoring of Federal Reserve Chairman Jerome Powell to cut interest rates was seen in Beijing as evidence that the president thought the U.S. economy was more fragile than he claimed.
  2. Beijing was further encouraged by Mr. Trump’s frequent claim of friendship with Chinese President Xi Jinping and by Mr. Trump’s praise for Chinese Vice Premier Liu He for pledging to buy more U.S. soybeans.

An April 30 tweet, in which Mr. Trump coupled criticism of Mr. Powell with praise of Chinese economic policy, especially caught the eye of senior officials. “China is adding great stimulus to its economy while at the same time keeping interest rates low,” Mr. Trump tweeted. “Our Federal Reserve has incessantly lifted interest rates.”

Why would you be constantly asking the Fed to lower rates if your economy is not turning weak,” said Mei Xinyu, an analyst at a think tank affiliated with China’s Commerce Ministry. If the U.S.’s resolve was weakening, the thinking in Beijing went, the U.S. would be more willing to cut a deal, even if Beijing hardened its positions.

That assessment, however, flies in the face of a strong U.S. economy. Gross domestic product in the first quarter rebounded from the end of 2018, with growth clocking in at a seasonally adjusted annualized rate of 3.2%, up from 2.2% the prior quarter. The jobs report for April, released on Friday, showed the unemployment rate falling to 3.6%, the lowest in nearly 50 years.

But at the same time, China’s economy has stabilized this year following months of weakness. Although China’s exports dropped unexpectedly in April, its first-quarter growth came in at 6.4%, beating market expectations. The generally improving economic picture gave Beijing more confidence in trade talks, as did a recent conference on the country’s vast infrastructure-spending program, called the Belt and Road Initiative, which was attended by about 40 heads of government and state.

Chinese leaders saw the conference turnout “as China has more leverage to improve relations with other countries and with the U.S. business community,” said Brookings Institution China specialist Cheng Li. “It made them play hardball.”

If China misread the signals—and vice versa—it wouldn’t be the first time.

The history of U.S.-China trade negotiations is filled with misunderstandings, as the two nations, with very different political systems, struggle to figure out each other’s intentions.

.. In another apparent sign of mixed signals, Trump administration officials had thought they had made it clear that they were weary of negotiations and that it was time for Beijing to make specific commitments to change laws, including adding protections for intellectual property and barring the forced transfer of U.S. technology.

As talks resume Thursday, one big question mark is whether China will agree to U.S. demands for changes in Chinese law to implement the trade deal. Beijing maintains this would impinge on Chinese sovereignty and take too long to implement, but Beijing had made similar commitments in prior trade deals, including those it signed to join the WTO in 2001.

U.S. officials say Beijing has failed to make good on those commitments, while China has promised to further liberalize its economy.

“The U.S. is correct to seek a multiprong approach of not relying solely on commitments but also actually changes to the laws, so as to ensure Chinese leadership intentions are fully conveyed down to all local levels of government,” said Harvard Law Professor Mark Wu.

President Trump is blaming the Federal Reserve for holding back the economy and stock marke

President Trump is blaming the Federal Reserve for holding back the economy and stock market, despite the Fed’s decision to do two things he wanted: halt rate increases and stop shrinking its asset portfolio. According to a person who directly heard Mr. Trump’s comments at a meeting, the president recalled a recent phone conversation with Fed Chairman Jerome Powell. “I guess I’m stuck with you,” the president recalled telling Mr. Powell. Mr. Trump has blasted the Fed and Mr. Powell at three meetings in the past week alone.

From reporter Nick Timiraos:

Fed officials have been puzzled by surprisingly muted inflation pressures in recent months, which—together with worries about growth in Europe and China, and increased market volatility late last year—justified their interest-rate pause in the first quarter. One challenge for Mr. Powell that his recent predecessors didn’t face: President Trump’s acerbic criticism—by pre-emptively blaming the central bank for any wobbliness in the economy—could magnify any misstep. Even though Fed officials promise they are tuning out politics, every comment by Mr. Trump will inevitably filter the Fed’s policy decisions through a political lens in the eyes of at least some market participants.

Stock Market Rout Has Trump Fixated on Fed Chair Powell

 President Trump has unabashedly hitched his political fortunes to a rising stock market. Now, with stock prices in retreat, he has become increasingly fixated on the idea that one man is to blame for the recent rout: Jerome H. Powell, chairman of the Federal Reserve.

After the Fed raised its benchmark interest rate on Wednesday, the fifth consecutive quarterly increase, Mr. Trump fretted to aides that Mr. Powell would “turn me into Hoover,” a reference to the man who was president in the early years of the Great Depression.

Mr. Trump has said choosing Mr. Powell for the Fed job last year was the worst mistake of his presidency, and he has asked aides whether he has the power to fire him.

But the volatile stock market, which just posted its worst week since 2008, is falling in part because of Mr. Trump’s own policies, including

  • an escalating trade war with China,
  • a shutdown of the federal government and
  • the fading effects of the $1.5 trillion tax cut Mr. Trump ushered in at the end of 2017.

While the Fed’s rate increases have upset investors — who seem to have a darker view of economic growth than the central bank does — some analysts said Mr. Trump’s musings about the Fed would only exacerbate anxieties.

If Powell gets terminated, what we’ve seen happen in the markets in the past few weeks will look like a walk in the park,” David Rosenberg, chief economist at Gluskin Sheff, said in an email on Sunday. “The dollar will go into a tailspin, and even confidence in the Treasury market will erode, especially among foreign creditors.”

Mr. Trump’s economic advisers scrambled over the weekend to reassure markets that Mr. Trump was not, in fact, planning to fire Mr. Powell. Treasury Secretary Steven Mnuchin tweeted what he said was a quote from Mr. Trump accepting that he did not even have the power to do so.

Mick Mulvaney, the incoming acting White House chief of staff, implied on Sunday that Mr. Trump had, in fact, inquired about removing Mr. Powell, saying on ABC’s “This Week” that the president “now realizes he does not have the authority.” But Mr. Mulvaney added that he had heard this from Mr. Mnuchin, not from Mr. Trump.

.. Mr. Mnuchin has worked in recent days to obtain Mr. Trump’s assurance that he would not remove Mr. Powell, according to an administration official who spoke on condition of anonymity. But that person cautioned that Mr. Trump could change his mind. The person noted Mr. Trump has a tendency to nurse grudges even when he temporarily sets a subject aside.

.. Some economists argue the Fed should continue its stimulus campaign to drive up employment and wages. They note that the Fed is about to undershoot its 2 percent inflation target for the seventh consecutive year, suggesting there is no need to step on the brakes.

.. In fact, during his presidential campaign, Mr. Trump accused the Fed of getting political, saying that the bank’s chairwoman at the time, Janet L. Yellen, should be “ashamed” for keeping interest rates low — a move he said was meant to help President Barack Obama.

But it is far from clear such a decision would serve the president’s purpose. A replacement for Mr. Powell would require Senate confirmation, and this person would join a policymaking committee that voted unanimously for the December rate increase. That committee also might be inclined, on future rate decisions, to demonstrate its independence from the president.
.. Mr. Trump also chose three of the other four members of the Fed’s board, all of whom joined Mr. Powell in voting for all four 2018 rate increases.
In conversations with friends and advisers, Mr. Trump has acknowledged responsibility for the selection of Mr. Powell. He told Stephen Moore, an economist at the Heritage Foundation, that it was “one of the worst choices I’ve ever made,” according to Mr. Moore.
Some of Mr. Trump’s economic advisers have encouraged him to remove Mr. Powell, arguing that the decision would reverse recent stock declines.

Sarah Binder, a professor of political science at George Washington University, said presidents had often tried to shape Fed policy, but the current episode stood apart because Mr. Trump appeared to be acting against his own interest in a stable economy.

“I think what is the unusual part here is that it seems the president has created the crisis,” she said. “His intervention certainly seems to be making things worse for him and worse for the Fed and worse for the economy. It’s just very shortsighted, and we’re not used to that.”