Barron’s compiled daily client memos from Greg Valliere, a Washington-based strategist with Horizon Investments, under the headline “Will Trump and Cruz’s Fed Feud Rattle Markets?” Subhed: “The two leading GOP candidates want to curb the Federal Reserve. Could that shake up stocks?”
Valliere notes that the three living retired Fed chairmen and the current Fed chair proclaimed that the U.S. economy is not in a bubble and not close to a recession, contrary to claims that Trump-on-the-Stump recently made. He also expresses mild consternation that Mr. Trump and Sen. Cruz would favor “an audit of the Fed’s policies,” that they are aligned with Tea Party Republicans who want to curb the New York Fed’s authority, and that they would mandate conditions under which the Fed could raise or lower interest rates.
He goes on to say, “Our bottom line is that a dispute between the Fed and Trump or Cruz could worry the financial markets if either candidate is perceived as having a chance in November. Anti-Fed legislation has been stalled in Congress, largely because it would face a certain veto from Barack Obama.”
Where to begin?
First let’s set one fact straight. Anti- (or, more specifically, Audit) the Fed legislation has twice passed the House, both by large bipartisan margins. It has been stopped by Sen. Bob Corker, a member of the Senate Banking Committee, whose vote would have been essential to committee passage. Senate Banking Chairman Shelby also made clear that he was for an audit of Fed policies rather than the wide-ranging audit Bill. Continue Reading