- Leon Cooperman thinks Trump is trying to pull market gains forward in a bid to boost stocks in the run-up to the 2020 election.
- Some possible moves include pressuring the Fed for aggressive rate cuts and manipulating the US dollar.
Cooperman: Trump is pulling forward stock gains
Billionaire investor and Omega Advisors chairman and CEO Leon Cooperman talked to CNBC on July 31. He suggested Donald Trump is trying to boost stock markets because he is seeking reelection in 2020. He said, “The president is very intent on getting the stock market up,” adding, “My guess is we’re doing a lot of things that are pulling demand forward.”
How US market performance compares with the rest of the world
The S&P 500 (SPY), Dow Jones Industrial Average (DIA), and Nasdaq Composite (QQQ) have gained 19.0%, 15.1%, and 23.9%, respectively, this year. They have returned more than the iShares MSCI ACWI ETF (ACWI), iShares MSCI Emerging Markets ETF (EEM), and iShares China Large-Cap ETF (FXI), which have returned 16.6%, 9.48%, and 8.55%, respectively. However, Trump seems to want markets to run even higher as the election approaches.
Trump’s pressure on the Fed
One move Trump might make is pressuring the Fed to cut interest rates. The Fed cut the interest rate by 25 basis points on July 31. Before the Fed’s July 30–31 meeting ended, he stated that the Fed had made the wrong move and he wanted to see a bigger cut. Trump said Fed chair Jerome Powell had “let us down” by not signaling further decreases. He insisted that aggressive rate-cutting is needed to keep up with China and Europe.
Trump is also quite vocal about his contributions to the US economy and markets. On July 31, he tweeted, “If I hadn’t won the 2016 Election, we would be in a Great Recession/Depression right now.”
Trump’s efforts to manipulate the US dollar
Trump has repeatedly talked about the strength of the US dollar, which he believes is too strong and puts the country at a disadvantage. A strong dollar makes US exports more expensive to other countries, and imports cheaper. He has also accused other countries of manipulating their currencies to strengthen their flagging economies. On July 2, he tweeted, “We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!”
Last week, Trump and his advisors met to discuss whether they should intervene in currency markets to artificially weaken the dollar. Ultimately, they decided against the idea. However, this proposal shows to what lengths Trump is ready to go to propel the economy and markets.