Gold speculator, financial author and Wall Street talking head James Rickards said in a recent interview with Kitco News that President Donald Trump is a genius, particularly when it comes to goosing the stock market to help his reelection chances with the unwitting help of the Federal Reserve.
“Trump is a funny kind of genius. He’s a real genius but it’s very hard for people to see it. Obviously, he cares about his reelection, he knows that Americans have been driven into 401(k)s and IRAs,” Rickards explained. “The old defined-benefits plans are gone and everybody is their own wealth manager, and even people who have wealth managers, they’re all robo-advisers.
“So they’re all doing the same thing and it’s very easy to see, and Trump knows that people look at the Dow Jones index. Now, I know that professionals look at the S&P, I get that, but the popular imagination thinks of the Dow Jones.”
To win again in 2020, Rickards said it’s simply a matter of keeping the stock market up. And it just so happens that both the S&P 500 and Nasdaq hit more record highs in intraday trading Monday. He also mentioned Trump needs to “calm down the trade war” with China, which happened when Trump announced last week the two sides had agreed to a phase one trade deal and they are now working on a second phase.
“The best way to do that, the surest way to do that, is to cut rates. That goes back to what we said at the beginning, which is the Fed left that open. They said, ‘We’re not going to raise rates,’ but they could cut them,” Rickards explained. “So with slow growth, I think you’ll see at least one, maybe two rate cuts (in 2020); that will give the stock market a boost. The other thing is calm down the trade war and it looks like we’re days away from doing that with the Chinese.
“So if you get good news on trade wars and the prospect of rate cuts, that’s going to keep the stock market up and that’s going to help Trump’s reelection.”
Rickards said he’s bullish on the stock market for 2020, and particularly on cash as well because it gives you “optionality.”
Kitco News Editor in Chief and host Daniela Cambone then mentioned that she has known Rickards for a number of years but did not recall him being so excited about the market ever before.
“Well, remember what happened last time Trump was elected: The stock market took off like a rocket, so he knows what works,” Rickards said. “I don’t say that (Fed Chair Jerome) Powell is out to reelect Donald Trump. Jay Powell is out to do what the Fed has to do, but what they have to do is cut rates and that’s going to help stocks and help Trump.”