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– It can cause the stock market massacre



Measured by the so-called Vix index of fears, after last week's sharp decline, markets fell again. But when Fed chief Jerome Powell brings the stage to Ackexon Gul, Wyoming on Friday, there is an obvious danger of another fall, according to the Danish stock market.

"Comments can trigger massacre on stock markets and bond markets," capital economist Paul Ashworth wrote in the analysis.

He says "it is difficult to know exactly what message Powell and other officials will deliver because the Fed's communications were very bad."

According to the economist, we can at least hope Powell avoids a "bigger boom" in his post, the website says.

Dramatic warning

The reason for the dramatic warning about the negative reaction of the speech market is that four interest rate cuts have been made year-on-year on the market, well beyond what Powell and the Federal Reserve themselves have cited.

President Donald Trump is trying to intervene in the monetary policy of the independent central bank, demanding a cut of 100 basis points.

"The dollar is so strong that it hurts other parts of the world. The key policy rate should, in a relatively short time, be reduced by at least 100 basis points, and possibly quantitative easing. If that happened, then our economy would be even better and the world economy would move sharply and quickly – good for everyone, "the president wrote on Twitter this week.

Read also: Trump wants a massive cut in interest rates: – Maybe even quantitative easing

For a long time, Trump has criticized the central bank for not doing enough on monetary policy in the United States. Monetary policy should be independent of fiscal policy, which is why Trump's statements are both unconventional and an institutional problem.

Will he surrender?

Demand for sharp interest rate cuts comes in parallel with Trump – and with his top economic advisers – voicing all the US recession warnings later this year or in 2020.

For Powell, the situation is that neither the growth of US economic growth nor unemployment indicates a rapid and sharp decline in interest rates. New indications that he will fall short of expectations this year can therefore be seen as acceptance and enthusiasm for the president, writes Borsen.

Powell is expected to speak at 1 p.m. 16.00 Norwegian time Friday.

Shares are rising

Two minutes after trading began on the New York Stock Exchange the Nasdaq index rose 0.24% to 8,039.39 points on Thursday, while the Dow's ones stood at 26,309.31 points after a 0.41% increase.

"Interest is now shifting towards a meeting of the central bank in Wyoming. Initially, it looks like the Fed chief will deliver his introduction tomorrow afternoon in Norwegian time, writes Ole-Andreas Kron in today's DNB Market report.


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