Yellen Fires First Shot in Trump’s Upcoming Battle with Fed

It’s pretty obvious on the charts. Trump mentions fiscal spending and the December E-mini Dow futures contract rallies from 17418 to 18918, or 1500 points in four days. Yellen mentions she is staying and the futures market goes nowhere. These could be signs that the market is fed up with monetary policy and ready to embrace fiscal policy.

Back around September 12, then presidential candidate Donald Trump gave a three minute interview with CNBC, where he accused Federal Reserve Chairwoman Janet Yellen of being in the tank for President Obama. Trump not only questioned her leadership, but he suggested she was taking actions to help Obama.

“She keeping them [interest rates] artificially low to get Obama retired.  … It’s a very serious problem,” Trump said, citing his concern that interest rates will rise in the future.

“I think she’s very political, and to a certain extent I think she should be ashamed of herself,” Trump added.

Trump must have gotten under her skin because last week while testifying before the Joint Economic Committee, Yellen was prepared to answer the critics. Yellen said she is not going to quit just because Trump won the election. Rep. Carolyn Maloney, D-N.Y., asked Yellen, “Can you envision any circumstances where you would not serve out your term as chair of the Federal Reserve?” “No, I cannot,” answered Yellen, “It is fully my intention to serve out that term.” Yellen’s appointment goes through January 2018.

What’s interesting about this whole exchange is that the man hasn’t even taken office and a U.S. representative and the current Fed Chairperson have actually taken the time to answer questions that basically deal with her relationship with the president-elect.

And on the same topic, if the Fed is politically independent then why did Yellen feel it was necessary to criticize Trump’s pledge to spend money on infrastructure? Again keep in mind that Trump hasn’t even taken office yet and the Fed still has an important interest rate decision to make less than a month from now.

President-elect Trump only pledged spending $1 trillion on infrastructure to help jump-start an economy. Yellen is already warning lawmakers that if they spend a lot on infrastructure and run up the debt, then down the road the economy may get into trouble.

No, I don’t believe Yellen. I do think she’s concerned about her job and her comments this week are just her way of saying “I will not go down without a fight.”