President Trump says the American economy is doing magnificently and we are "winning, big time, against China"—but one of the things still holding the economy back is the Federal Reserve chairman he appointed. In a pair of tweets Wednesday, Trump renewed his attacks on Jerome Powell, calling him "clueless" for raising interest rates "too much & too fast" in the past and being too slow to cut them now, giving other countries an advantage, CNBC reports. "Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE!," Trump said. "We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!" More:
- The yield curve explained. Fortune takes a look at the "Crazy Inverted Yield Curve" and why it is being blamed for the Dow's 800-point drop Wednesday. The yield curve is seen on a graph charting the maturity rates for the bonds a country issues, and while it generally slopes from right to left, "sometimes shorter-term maturities offer higher yields than longer-term ones, resulting in the curve sloping downward from left to right." This is generally seen around 18 months before a recession, and traders became jittery when the inverted curve appeared early Wednesday, with the interest rate on a 2-year Treasury bond slightly higher than the rate on a 10-year bond. The inversion, last seen in 2007, disappeared later in the day.
- Trump "clearly scared." The president, who sees an economic downturn as the biggest obstacle to his re-election, is "clearly scared" about the economy's prospects, writes Aaron Blake at the Washington Post. "Trump's strategy in blaming Powell for whatever lies ahead would seem twofold," he writes. First, "he can lean on Powell to give him what he wants for fear of shouldering the blame for anything bad that happens," he writes. Then, "if and when that bad stuff does happen, he can simply do what he always does and say, 'It’s not my fault; this guy wouldn’t listen to me.'"
- Time to dump stocks? Not so, according to equity managers who spoke to the Los Angeles Times. They say that while there have been economic worries for some time, a potential recession could still be a long way off. "We're not bailing, and we’re not expecting all of a sudden something magic to happen," says Lamar Villere, who helps manage about $2 billion. "I don't think anything fundamentally has changed for us based on the yield inversion."
- The chances of a recession. Economists are split on the chances of a recession occurring soon, with Julia Coronado, chief economist at MacroPolicy Perspectives, predicting there is a 40% chance of a downturn in the next 12 months, the AP reports. Employment figures and other indicators of a healthy economy remain strong, though economists warn that a downturn could be caused by millions of consumers pulling back on spending to prepare for a downturn. "We could end up talking ourselves into a recession," says Jay Bryson, global economist for Wells Fargo.
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