Sam Dickie: Fisher Funds expert on Donald Trump's attacks on Federal Reserve Chair Jerome Powell

US President Donald Trump has spent the past week verbally attacking Federal Reserve Chair Jerome Powell and it's prompted concerns from the markets.

Trump recently claimed the US economy could slow down unless interest rates were lowered immediately - and said that Powell's termination 'cannot come soon enough'.

Sam Dickie from Fisher Funds explains what this could mean for investors.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
Donald Trump has this week been attacking the Chair of
the Federal Reserve, Jerome Powell. Earlier this week he said
that Powell's termination cannot come soon enough. Think you may
have called him a major loser at some stage. Then
he later said he had no intention of file firing
pal And now he's gone on to attack Powell once
again for keeping the interest rates too high. Now, Sam
Dicky from Fisher Funds has been watching all of this
play out and he's with us.

Speaker 3 (00:37):
Hello, Sam, good eating here.

Speaker 2 (00:39):
This stuff is silly from Trump, right, because having a
central bank that is independent is crucial, but particularly in
the US.

Speaker 1 (00:46):
That's right, it is critical.

Speaker 3 (00:48):
So the US Federal Reserve has two primary jobs, maximum
employment within reason, so without causing the economy to overheat.
And the second one is stable prices, so keeping inflation
around two percent. And politicians incentives may run with that,
but mostly they'll often run counter that, and things like
being popular is more to them. So central bank is

(01:10):
like Powe. He remembers the nineteen seventies. He remembers when
President Nixon pressured the feed, they caved and cut interest
rates early, and this was the primary cause of the
stagflation crisis, where grow slowed and inflation shot through the roof.

Speaker 2 (01:25):
So what's Trump playing at? Why is he doing this?

Speaker 3 (01:31):
Excellent question. I think it's just a pressure cocko tactic,
And it's not like he's the first politician globally to
try and pressure independent central banks and sort of democracies.
But he wants rate cuts now to boost the economy
because he's aware that US growth is going to be
dragged lower due to his own Liberation Day tariffs. He
conveniently forgot to mention that and the uncertainty of liberation

(01:53):
they will cause businesses and consumers to sit on their
hands and not spin. Then as a result, like you said,
he called power major loser, But he is conveniently ignoring
the inflation and the impact of his own Liberation Day tariffs.

Speaker 2 (02:07):
So I mean, it's possible that what he's trying to
do is put pressure on Powell to do something. But
it's also possible that he is setting up, at least
in the public imagination, somebody else like a scapegoat for
what's going to happen next.

Speaker 3 (02:19):
A blame game exactly. He's no stranger to playing those.
It's also like sort of yelling at a referee to
sway the game. You know it's wrong, it might work,
most often it doesn't, and at best you get frowned
upon by the other mums and dads.

Speaker 2 (02:34):
Okay, so what does this mean for investors?

Speaker 3 (02:37):
We found his pain threshold again here that we discussed
last week. So it wasn't equity markets. It was the
thirty year bond yields. And remember thirty year bond yields
reflects several things, long term growth, long term inflation, and
the risk premium on the US government as a borrower.
And they spiked higher again as just the width of

(02:58):
the US feed losing its independence and therefore credibility, caused
those investors to put a higher risk premium on there.
And remember this hurts main streets. Ninety percent of mortgages
in the US has set off those rates. So he
blinked and said, I never had the intention of firing
feed chair Powe. I want him to be earlier, more
active on lowering rates and not late. But it's not

(03:19):
the end of the world if he doesn't cut rates.
So a complete backflip.

Speaker 2 (03:23):
Yeah, it's such a weird time. Sam, thank you so much.
As always, enjoy your long weekend. That's Sam Dicky Offisher
Funds

Speaker 1 (03:28):
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