Weekly Market Recap Jul 22, 2018

Generally a calm week for the indexes as most of the action was in individual stocks due to earnings. President Trump did roil things a bit by criticizing the Federal Reserve – seen as a no no, but at this point nothing should surprise from that front.

In a stinging and historically rare criticism, President Donald Trump expressed frustration with the Federal Reserve and said the central bank could disrupt the economic recovery. Presidents rarely intercede when it comes to the Fed, which sets the benchmark interest rate that flows through to many types of consumer debt.

Trump said he’s concerned that the timing may be poor and that it will put the U.S. at a “disadvantage” while the Fed’s counterparts like the European Central Bank and the Bank of Japan maintain loose monetary policy.

The president acknowledged that his comments are unusual but said he doesn’t care. “Now I’m just saying the same thing that I would have said as a private citizen,” he said. “So somebody would say, ‘Oh, maybe you shouldn’t say that as president.’ I couldn’t care less what they say, because my views haven’t changed.”

Friday, Trump said he was “ready” to put tariffs on all Chinese goods imported to the U.S., which would amount to more than $500 billion. Thursday, Trump threatened “tremendous retribution” against the European Union and stood by a pledge to levy tariffs on automobile imports. So we see the same pattern here as we often do – when Trump first comes out saying these type of things markets reacted sharply — then after they hear them for months on end, they get a bit immune to it all.

Nothing too surprising from Chairman Powell’s testimony on Capital Hill as he indicated the Federal Reserve wouldn’t move too quickly in changing monetary policy, and that it would be flexible in the face of changing conditions.

Saying that monetary policy “should be a mystery to no one,” Federal Reserve Chairman Jerome Powell on Tuesday made clear the central bank plans to continue raising interest rate at a pace of once every three months, at least “for now.” This was seen as suggesting that the central bank wouldn’t become too aggressive in raising rates, something that is widely seen as a risk to markets.

Krishna Guha, Fed watcher at Evercore ISI said the phrase “hints…we may not be very far in time and in rate space from the point at which the case for further hikes will be less automatic and the Fed will have to make decisions on a meeting by meeting basis depending on the evolution of the outlook.”